Yahoo Finance Live anchors Julie Hyman and Brad Smith break down April PMI data from S&P Global.
JULIE HYMAN: We’ve got breaking PMIs, Purchasing Managers’ Index here for April. The composite PMI coming in at 53 and a half. That is ahead of estimates and ahead of the prior month, ahead of the estimate for 51.2. And then there are two components of this, right? There’s manufacturing, which came in at 50.4. That is better than estimated as well. And services at 53.7%.
All three of these measures coming in higher than economists had estimated. And as I like to always remind you, folks, it is 50 is the dividing line between expansion and contraction. So it’s especially interesting here to see that manufacturing number come in above that 50 mark. I’m not quite sure when is the last time that we had that, but I believe it’s been a minute here.
So just looking at the release. And I know you have this up too, Brad, to try to see some of the commentary around here. New orders at US firms. That’s standing out to me. Increasing at the sharpest rate for 11 months in April. So that’s a positive thing here.
So one of my takeaways just like first blush takeaways here is we’ve been talking about a month, a week, I should say, of mixed economic data, where some of those data points come in weaker than estimated, right? Here is the freshest data that we have. This is an April preliminary read that is coming out ahead of estimates.
Just like when you wanted some clarity on the economic picture, either to the up or to the downside, this is not the report that’s going to give it to you because this looks like it is a pretty darn strong report.
BRAD SMITH: Yeah, this is– it creates quite the conundrum for any Fed member who is looking across the wave of economic data that we’ve seen come through, trying to discover what’s bad, what’s good, separate them from each other, and try to figure out where trends are beginning to formulate. Here on the manufacturing supply chains, interesting to note they continued to improve during April. The respective index little change from the survey. Record upturn seen in March. And suppliers delivery times have now shortened for three months running, with goods producers citing improved raw material availability and lower demand.
However, survey respondents noted ongoing difficulties with sourcing electrical items and supply constraints across Asia, which is particularly interesting to note given the international reliance on just sourcing those raw materials. And what we’ve been continuing to monitor within– a resurgence within Asia-Pacific and that region as well right now.
JULIE HYMAN: Something else that is a problem for the Fed, prices are still going up. So in the services part in particular according to S&P, selling prices increasing at a sharper pace. Firms responding to higher cost burdens by passing these through to customers where possible. The rate of inflation accelerating for the third month running and was the quickest since last August. That is not something that the Fed or for that matter people who are thinking that the Fed is going to cut rates this year are going to want to hear here.
And again, that was on the services side. Although, on the manufacturing side, it talks about notable hikes in supplier prices driving up the rate of cost inflation in April as well.
BRAD SMITH: Yeah, the key business, chief business economist here is saying in a quote that the key takeaway for now is that the economy as a whole is not only showing encouraging resilience, something that we’ve continued to hear from the banks, but encouraging resilience, but has gained growth momentum heading into the second quarter. That’s according to the latest PMI reading broadly indicative of GDP rising at a robust quarterly rate of 4/10 of a percent.
JULIE HYMAN: Good and the bad.
BRAD SMITH: Yeah, exactly.