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Why US Manufacturing Growth Failed to Meet Expectations in April

Sarah Sands

Key Economic Indicators: Jobs, Crude Oil, and Manufacturing Data

(Continued from Prior Part)

US manufacturing PMI

According to data provided by Markit Economics, the US manufacturing PMI (purchasing managers’ index) came in at 50.8 for the month of April. This was lower than the previous month’s reading of 51.5. It was also below the Market expectation of 52 and was one of the lowest readings since September 2009, as new business growth slowed down and production growth remained stagnant. A level above 50 indicates expansion, and a level below 50 indicates a slowdown in manufacturing activity. As April’s PMI was above 50 but below both March’s reading and Market expectations, we can say expansion was weak.

Slowdown in new business growth

There was a slowdown in new business growth in April. According to data provided by Markit Economics, there was overall subdued demand in the manufacturing sector and continuing weakness in the energy sector. The global (ACWI) (VEU) economic outlook, the slowdown in emerging markets (EEM) (VWO) (EDC), and the US (VOO) (IWM) (VFINX) political climate weighed on clients’ decisions to spend more. However, economists expect that the US economy will pick up after a slowdown in the first quarter. Job growth in the manufacturing sector remained stagnant due to lower commodity and crude oil prices, while job growth in the services sector is improving.

In the next part of this series, we’ll discuss what the ZEW Economic Sentiment Index indicates for Germany (EWG).

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