US business expectations are upbeat this month and confidence in the outlook for next year has risen to the second highest level since May 2022.”
S&P Global.
Business activity in the United States and the euro zone accelerated in April, despite central banks signaling they are nearing the height of their cycles of interest rate hikes, designed to sufficiently cool demand among consumers. to reduce high inflation.
S&P Global reported that its US PMI Composite Production Index, which tracks the manufacturing and service sectors, rose to 53.5 points this month, the highest level since May 2022, after a reading of 52.3 points in March.
This data contrasts with indications that the economy is at risk of entering a recession as high rates begin to take their toll.
For its part, in the euro area the services sector, which is dominant in the bloc, also experienced an increase in demand, which more than offset the worsening of the manufacturing sector.
The PMI registered an 11-month high of 54.4 compared to 53.7 in March.
“The PMI casts a positive light on the economic performance of the euro zone, as the rebound in activity in the service sector drives growth,” explained Bert Colijn, ING’s chief economist for the euro zone, however he mentioned that the weakness of the manufacturing sector remains a cause for concern.
The manufacturing PMI fell to 45.5 from 47.3 in March, its lowest level since the first wave of the Covid-19 pandemic.
In Germany, the main European economy, manufacturing and private activity increased from 52.6 to 53.9 points. Similar situation in the United Kingdom, whose composite PMI, which includes manufacturing and service companies, rose to 53.9 points from 52.2 in March.
“The main takeaway is that the economy as a whole is not only showing encouraging resilience, but has picked up momentum heading into the second quarter,” said Chris Williamson, chief economist at S&P Global.
mixed signals
However, at least in the United States, the hard data paints an increasingly bleak picture. The job market cools, retail sales decline and manufacturing production plummets, leading most economists to forecast a recession beginning in the second half of the year.
In addition, banks have tightened up on lending, which could make credit less accessible to households and small businesses. Surveys from the Institute for Supply Management point to a loss of momentum in the service sector.
