Breaking: US S&P Global Manufacturing PMI is seen rising above consensus in April

A preliminary reading of S&P Global’s Composite PMI showed US business activity expanded at a slower pace in April, with the index easing to 51.2 from March's 53.5. The figure—just above the 50 threshold that separates growth from contraction—points to a softening in private sector momentum.

The underlying data revealed a diverging performance across sectors. Manufacturing activity continued to grow modestly, with the Manufacturing PMI inching up to 50.7 from 50.2. However, the Services PMI fell to 51.4 from 54.4—a sign that demand in the dominant services sector may be losing steam.

In the wake of the news release, Chris Williamson, Chief Business Economist at S&P Global Market Intelligence argued: “The early flash PMI data for April point to a marked slowing of business activity growth at the start of the second quarter, accompanied by a slump in optimism about the outlook. At the same time, price pressures intensified, creating a headache for a central bank which is coming under increasing pressure to shore up a weakening economy just as inflation looks set to rise.”

Market reaction

The Greenback trims part of its daily decline, with the US Dollar Index (DXY) now approaching the 99.50 region following the mixed performance from the US business activity in the current month.

This section below was published as a preview of the US S&P Global PMI data at 08:00 GMT.

• The S&P Global advanced PMIs for April are seen worsening further.
• Markets expect the Federal Reserve to cut rates in June by 25 bps.
• EUR/USD keeps the trade in the area of three-year highs past 1.1500.

This Wednesday, S&P Global will unveil its preliminary April Purchasing Managers’ Indices (PMIs) for the United States, drawing on surveys of senior private sector executives to offer an early read on economic momentum.

The report comprises three measures — the Manufacturing PMI, the Services PMI and the Composite PMI (a weighted blend of the two) — each calibrated so that readings above 50 denote expansion and those below 50 signal contraction. Published well ahead of many official statistics, these monthly snapshots assess everything from output and export trends to capacity utilization, employment and inventory levels, providing one of the first indicators of the economy’s direction.

In March, the Composite PMI came in at 53.5, improving from the previous month’s 51.6 reading. According to Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, “The strong start to the year for US manufacturers has faltered in March. A combination of improved optimism surrounding the new administration and the need to front-run tariffs had buoyed the goods-producing sector in the first two months of the year, but cracks are now starting to appear. Production fell for the first time in three months in March, and order books are becoming increasingly depleted.”

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

Investors are bracing for a modest pullback in April’s flash Manufacturing PMI, expected to slip from 50.2 to 49.4, while the Services PMI is forecast to ease from 54.4 to 52.8.

Although a slight downturn in factory output may not alarm markets, any resilience — or rebound — above the 50 threshold could soothe lingering growth concerns, especially if service sector momentum holds firm.

Investors will be zeroing in on the PMIs’ granular inflation and employment gauges. In his latest comments, Fed Chair Jerome Powell underscored the Fed’s deliberate approach to restarting its easing cycle, warning that anchoring consumer price expectations remains paramount amid mounting uncertainty over President Trump’s tariff crusade.

A marked surprise in the services PMI — paired with manufacturing’s return to expansion — would likely give the US Dollar a boost. Meanwhile, evidence of rising input costs in services alongside robust job gains would cement bets on a “higher‑for‑longer” Fed. Conversely, signs of easing price pressures and lackluster private sector hiring could rekindle hopes for fresh monetary relief — and weigh on the Greenback.

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

The S&P Global Manufacturing, Services and Composite PMIs report will be released on Wednesday at 13:45 GMT and is expected to show US business activity extending the loss of momentum observed since the turn of the year.

Ahead of Wednesday’s PMI flash readings, Pablo Piovano, Senior Analyst at FXStreet warns that a bullish turn in EUR/USD could see spot challenge its YTD peak of 1.1572 (April 21), ahead of the October 2021 high at 1.1692 (October 28), and the September 2021 top at 1.1909 (September 3).

Conversely, Piovano notes that occasional bearish moves should not meet any support of relevance until the critical 200-day Simple Moving Average (SMA) at 1.0762, which reinforces the weekly trough at 1.0732 (March 27).

“While above the 200-day SMA, the pair’s bullish stance should remain unchanged”, Piovano adds.

Technical indicators still paint a constructive picture, although they warn of a potential correction in the pipeline: While the Average Directional Index (ADX) surpasses the 51 level, indicative of a strong trend, the Relative Strength Index (RSI) well in the overbought region above 75 hints at the idea that a probable “technical correction” may be in the offing, Piovano concludes.