US business activity picked up in April, with the Flash Composite PMI rising from 50.3 to 52.0, a three-month high. The improvement suggests the economy regained some momentum after near-stagnation in March, though the overall pace remains modest. The data is broadly consistent with the economy struggling to sustain annualized growth much above 1%, with the vast services sector acting as the principal drag despite a return to expansion.
Manufacturing led the economy. PMI rose from 52.3 to 54.0, while output jumped from 53.2 to 55.7, the strongest in four years. However, much of the strength appears precautionary. Firms reported “panic” and “emergency” buying of inputs, building inventories ahead of expected supply disruptions and price increases linked to the Middle East conflict and ongoing tariff pressures.
The services sector, by contrast, remains subdued. PMI edged up from 49.8 to 51.3, but demand growth is weak, with hesitancy in spending across travel, finance, and other services. Higher prices and the prospect of tighter financial conditions are acting as a drag on activity, keeping overall growth modest.
At the same time, inflation pressures are accelerating sharply. Input costs and output prices rose at the fastest pace since mid-2022, driven by energy, commodities, and rising wages.
| Indicator | Apr | Mar |
|---|---|---|
| PMI Composite | 52.0 | 50.3 |
| PMI Services | 51.3 | 49.8 |
| PMI Manufacturing | 54.0 | 52.3 |
| Manufacturing Output | 55.7 | 53.2 |
