National Flash PMIs (SPG)

The S&P Global Flash US Composite PMI fell sharply to 51.2 in April 2025, down from 53.5 in March, indicating the slowest growth in private sector activity in 16 months. The decline was driven by a notable deceleration in services sector activity (51.4 vs 54.4), while manufacturing activity improved slightly (50.7 vs 50.2). Business sentiment dropped to near pandemic lows, and prices charged surged - especially in manufacturing - due to tariffs and supply constraints. New export orders collapsed, while job growth stalled in services and turned negative in manufacturing. Confidence plunged due to policy uncertainty, cost pressures, and fragile global demand.

Interpretation

April’s PMI readings confirm that the US economy is heading into payback, with cracks widening beneath a surface still technically in expansion (according to literal interpretations of these sentiment indicators). The Composite PMI slid to 51.2, a level not seen since December 2023, and a sharp drop from 53.5 just a month earlier. Though still above the 50 threshold that separates growth from contraction, the trend is unambiguously negative.

The services sector - long the core driver of US growth - slowed dramatically. The Services PMI collapsed to 51.4 from 54.4 in March, marking the second-softest pace of expansion in a year and the second time near 51 in the last three months. New orders dried up amid growing client anxiety over tariff escalation and a murky economic policy direction. Even more concerning, foreign demand faded, compounding the drag on growth. Hiring also slowed due to weaker demand, suggesting a structural ceiling on future service sector expansion.

The Manufacturing PMI surprised to the upside at 50.7, beating expectations of 49.1 and marking a fourth month of marginal growth. But the devil is in the details: the slight uptick in new orders came almost exclusively from domestic customers, while export orders fell sharply, hit by retaliatory tariffs and a deteriorating global trade environment. Output prices surged at their fastest rate in 29 months, driven by rising input costs - thanks to tariffs and supply bottlenecks.

Manufacturers cut jobs for the first time since October, another signal that confidence is slipping and that they don’t expect volumes to keep up over the months ahead (lagging payback).

Indeed, business sentiment across both sectors hit its lowest level since late 2022, highlighting that forward-looking expectations are collapsing. The tariff regime may have front-loaded some demand, but the longer-term picture is one of rising price pressures combined with faltering external demand, all weighing on hiring and investment.

In short, while the US economy remains technically in expansion, momentum has definitely reversed. “Inflationary” risks are re-emerging even as demand cools - a troubling mix that leaves the economy increasingly vulnerable to a hard landing, one now even more likely to deliver a blow to job prospects.