US Business Activity Rebounds in April, but Growth Remains Subdued Amidst Geopolitical Tensions
U.S. business activity experienced a rebound in April 2026, with the S&P Global Composite PMI Output Index rising to a three-month high of 52.0. This marks an improvement from March's reading of 50.3, which had indicated near-stagnation.
The recovery was largely propelled by a significant surge in the manufacturing sector, which saw its output rise at the sharpest rate in four years. This was fueled by the largest influx of new orders since May 2022. The manufacturing PMI itself climbed to 54.0, its highest level in 47 months. However, the services sector continued to be a drag on overall growth, with its activity remaining subdued despite a slight improvement from the previous month. The Services PMI rose to 51.3, but demand within the sector faltered, showing the second-weakest expansion in the past year.
Economists suggest that the recent uptick in manufacturing may be partly reactive, with companies engaging in "panic" and "emergency" buying to build safety stocks amid concerns over supply availability and rising prices, reminiscent of pandemic-era disruptions. This buying activity was reportedly spurred by the ongoing conflict in the Middle East, which has disrupted supply chains and led to increased supplier delivery times.
Inflationary pressures are also mounting. The survey's measure of prices paid by businesses for inputs increased to an 11-month high, and average prices charged for goods and services rose at the fastest rate since July 2022. This acceleration in inflation is strengthening expectations that the Federal Reserve may delay interest rate cuts.
Despite the overall rebound in business activity, the pace of expansion remains "muted" and well below the levels seen in the previous year. Chief Business Economist at S&P Global Market Intelligence, Chris Williamson, noted that "over the past three months we have seen the weakest expansion of output recorded since the start of 2024 with the war in the Middle East squarely to blame."
Employment in the private sector saw only marginal growth in April, following a slight fall in March, as companies expressed concerns about uncertain demand and high input prices. Consumers' economic confidence also dropped in April, with a significant majority believing conditions are worsening, reaching lows not seen since October 2023.
The recovery was largely propelled by a significant surge in the manufacturing sector, which saw its output rise at the sharpest rate in four years. This was fueled by the largest influx of new orders since May 2022. The manufacturing PMI itself climbed to 54.0, its highest level in 47 months. However, the services sector continued to be a drag on overall growth, with its activity remaining subdued despite a slight improvement from the previous month. The Services PMI rose to 51.3, but demand within the sector faltered, showing the second-weakest expansion in the past year.
Economists suggest that the recent uptick in manufacturing may be partly reactive, with companies engaging in "panic" and "emergency" buying to build safety stocks amid concerns over supply availability and rising prices, reminiscent of pandemic-era disruptions. This buying activity was reportedly spurred by the ongoing conflict in the Middle East, which has disrupted supply chains and led to increased supplier delivery times.
Inflationary pressures are also mounting. The survey's measure of prices paid by businesses for inputs increased to an 11-month high, and average prices charged for goods and services rose at the fastest rate since July 2022. This acceleration in inflation is strengthening expectations that the Federal Reserve may delay interest rate cuts.
Despite the overall rebound in business activity, the pace of expansion remains "muted" and well below the levels seen in the previous year. Chief Business Economist at S&P Global Market Intelligence, Chris Williamson, noted that "over the past three months we have seen the weakest expansion of output recorded since the start of 2024 with the war in the Middle East squarely to blame."
Employment in the private sector saw only marginal growth in April, following a slight fall in March, as companies expressed concerns about uncertain demand and high input prices. Consumers' economic confidence also dropped in April, with a significant majority believing conditions are worsening, reaching lows not seen since October 2023.
This article and image are AI generated. For informational purposes only.