U.S. Inflation Accelerates as 70% Say Economy Is Worsening

U.S. inflation accelerated in April as S&P Global’s composite purchasing managers index climbed to 52.0, a three-month high. The manufacturing PMI reached 54.0, the strongest reading in 47 months, while the services PMI edged to 51.3.

The report found the average price of goods and services rose at the fastest pace since July 2022. Input costs increased at their quickest rate in 11 months. Manufacturing inflation hit a ten-month high and price rises in the service sector reached a 45-month high.

S&P Global’s survey showed much of the manufacturing strength came from precautionary buying. Respondents used terms such as “panic buying” and “emergency buying” as companies accelerated purchases to build inventories. New orders recorded only marginal growth, and firms in tourism, financial services and other sectors reported households and businesses holding back spending.

Supply chains showed renewed strain in April. Delays from factory suppliers were the worst since August 2022, with some disruptions tied to shipping difficulties from ongoing hostilities overseas. Firms that bought excess inventory added pressure to supply, which can push prices higher.

A recent poll found 70% of respondents believe the economy is getting worse, up from 55% a year earlier; 26% said conditions have improved. Pessimism extended across party lines, with 56% of Republicans describing the economy as bad. The president’s economic approval rating fell to 30% in April from 38% in March, and roughly one in four Americans approve of his handling of the cost of living.

Energy costs contributed to higher consumer prices. Oil approached $90 a barrel amid tensions with Iran. U.S. naval actions and Iran’s closure of the Strait of Hormuz have constrained flows and added pressure to markets. Forecasters note the prospect of gasoline nearing $5 a gallon as a risk for household budgets and inflation readings.

Chris Williamson, chief business economist at S&P Global, warned: “If inflation keeps moving in the direction the PMI data suggests, it becomes much harder for the central bank to make a case for cutting interest rates.” Economists said stockpiling that boosts PMI readings may not translate into sustained demand once inventories normalize, complicating monetary policy choices.

The S&P Global data showed a split between headline activity and underlying drivers: manufacturing output and purchasing rose amid defensive buying, while services activity expanded only modestly and new orders remained weak. Input-price pressures and supply-chain bottlenecks were identified as key factors behind the renewed upward pressure on prices.