News & Analyses

US PMI data set to show continued economic expansion in April

  • S&P Global PMIs are expected to indicate business activity in the US continued to expand in April.
  • Manufacturing and Services output are seen advancing at a moderate pace. 
  • EUR/USD holds above 1.0600, near-term bearish bias remains intact. 

S&P Global will release the flash estimates of the United States (US) Purchasing Managers Indexes (PMIs) for April on Tuesday, a survey that measures business activity throughout the month. The report is divided into services and manufacturing output and compiled in a final figure, the Composite PMI. 

The economic activity in the US private sector expanded at a moderating pace in March, with the S&P Global Composite PMI edging lower to 52.1 from 52.5 in February. The Services PMI declined to 51.7 from 52.3 in this period, while the Manufacturing PMI fell to 51.9 from 52.2.
Commenting on the survey’s findings, “further expansions of both manufacturing and service sector output in March helped close off the US economy’s strongest quarter since the second quarter of last year,” said Chris Williamson, Chief Business Economist at S&P Global Market Intelligence.

“The survey data point to another quarter of robust GDP growth accompanied by sustained hiring as companies continue to report new order growth,” Williamson added. “A steepening rise in costs, combined with strengthened pricing power amid the recent upturn in demand, meant inflationary pressures gathered pace again in March.” 

What to expect from the next S&P Global PMI report?

S&P Global Manufacturing PMI and Services PMI are both expected to come in at 52 in April’s flash estimate, highlighting an ongoing expansion in the private sector’s economic activity. Any reading above 50 signals economic activity is growing, while an indicator below this threshold suggests contraction.

Since the beginning of the year, the two main highlights of the US economy have been robust activity and stubborn inflation. Hence, market participants have shifted their expectations toward an extended delay in the Federal Reserve’s (Fed) policy pivot towards rate cuts. Earlier in the year, investors were forecasting the Fed to lower the policy rate as early as March. Employment, activity and inflation data in the first quarter of 2024 largely surprised to the upside and caused investors to reassess the US central bank’s policy outlook. According to the CME FedWatch Tool, markets currently price in a 65% probability that the Fed will lower the policy rate in September.

Flash PMI data for April are expected to confirm that the US economy preserved its strength to start the second quarter. Comments regarding the input costs could also point to ongoing inflationary pressures.

When will April flash US S&P Global PMIs be released and how could they affect EUR/USD?

The S&P Global PMI report will be released on Tuesday at 13:45 GMT. Ahead of the event, the US Dollar (USD) stays resilient against its rivals. The USD Index (DXY), which tracks the USD’s performance against a basket of six major currencies, seems to have entered into a consolidation phase after setting a five-month high above 106.00 in the previous week, boosted by hawkish Fed commentary and risk aversion.

Unless either the Manufacturing or the Services PMI unexpectedly drops below 50 and shows a contraction in the sector’s activity, the USD could hold its ground. If the publication highlights a downturn in private sector’s employment, or a softening in input costs, the USD could come under selling pressure even if headline PMIs hold above 50.

Eren Sengezer, European Session Lead Analyst at FXStreet, shares a brief outlook for EUR/USD:

“The Relative Strength Index (RSI) indicator on the daily chart stays below 40, suggesting that EUR/USD has more room on the downside before it turns technically oversold.”

“On the upside, 1.0700 (static level) aligns as interim resistance before 1.0750, where the 20-day Simple Moving Average (SMA) is located. A daily close above this level could attract technical buyers and open the door for an extended recovery toward the 200-day SMA at 1.0820. On the other hand, supports are located at 1.0600 (static level), 1.0500 (psychological level, static level) and 1.0450 (October 3 low).”

Economic Indicator

S&P Global Services PMI

The S&P Global Services Purchasing Managers Index (PMI), released on a monthly basis, is a leading indicator gauging business activity in the US services sector. As the services sector dominates a large part of the economy, the Services PMI is an important indicator gauging the state of overall economic conditions. The data is derived from surveys of senior executives at private-sector companies from the services sector. Survey responses reflect the change, if any, in the current month compared to the previous month and can anticipate changing trends in official data series such as Gross Domestic Product (GDP), industrial production, employment and inflation. A reading above 50 indicates that the services economy is generally expanding, a bullish sign for the US Dollar (USD). Meanwhile, a reading below 50 signals that activity among service providers is generally declining, which is seen as bearish for USD.

Read more.

Last release: Wed Apr 03, 2024 13:45

Frequency: Monthly

Actual: 51.7


Previous: 51.7

Source: S&P Global


A country’s Gross Domestic Product (GDP) measures the rate of growth of its economy over a given period of time, usually a quarter. The most reliable figures are those that compare GDP to the previous quarter e.g Q2 of 2023 vs Q1 of 2023, or to the same period in the previous year, e.g Q2 of 2023 vs Q2 of 2022. Annualized quarterly GDP figures extrapolate the growth rate of the quarter as if it were constant for the rest of the year. These can be misleading, however, if temporary shocks impact growth in one quarter but are unlikely to last all year – such as happened in the first quarter of 2020 at the outbreak of the covid pandemic, when growth plummeted.

A higher GDP result is generally positive for a nation’s currency as it reflects a growing economy, which is more likely to produce goods and services that can be exported, as well as attracting higher foreign investment. By the same token, when GDP falls it is usually negative for the currency. When an economy grows people tend to spend more, which leads to inflation. The country’s central bank then has to put up interest rates to combat the inflation with the side effect of attracting more capital inflows from global investors, thus helping the local currency appreciate.

When an economy grows and GDP is rising, people tend to spend more which leads to inflation. The country’s central bank then has to put up interest rates to combat the inflation. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold versus placing the money in a cash deposit account. Therefore, a higher GDP growth rate is usually a bearish factor for Gold price.


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