US Economy: Business for US service providers is gaining momentum

Business of American service providers is gaining momentum

The Purchasing Managers’ Index for the sector rose to 51.9 in April from 51.2 in March.

Published: 03.05.2023, 17:32

Experts had actually expected a slightly lower increase.

Image: Damian Doverganes/AP Photo/Keystone

The growth rate of US service providers accelerated in April. According to the ISM survey released on Wednesday, the Purchasing Managers’ Index for the sector rose to 51.9 points from 51.2 in March. Experts polled by Reuters had expected a rise of just 51.8 points. The barometer shows a rise of more than 50 points.

Although the service sector has picked up pace, U.S. manufacturing has slowed somewhat, at least recently. According to the recently released ISM survey, the Purchasing Managers’ Index for the sector rose 0.8 points to 47.1 in April. In the view of Helaba economist Ulrich Wörtberg, the dynamics of the service sector will be relatively high and this sector will be the pillar of the economy: “The central bank should confirm its intention to raise interest rates again. Evening. However, the figures cast doubt on whether expectations of key interest rate cuts this year are justified.”

The US Federal Reserve has raised interest rates sharply over the past year to curb inflation. This has had one effect: US economic growth halved in the first quarter. From January to March, GDP grew by only 1.1% on a year-on-year basis. For the central bank’s upcoming interest rate decision in the evening (20.00 CEST), many experts expect monetary authorities to raise the monetary policy level by a quarter of a percentage point to 5 to 5.25%, marking interest rates. Pause for a while to allow monetary policy tightening to gradually reveal its full effect.

Reuters

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