Investing.com – Business activity in the U.S. private sector unexpectedly weakened in April to its slowest pace in seven months, dampening optimism over the American economy, according to preliminary data released on Friday.
In a report, market research group Markit said that its fell to 52.5 in April, from the prior month’s reading of 52.8.
Analysts had expected the reading to recover to 53.0.
Services make up approximately 80% of the U.S. economy which makes the data key for interpreting growth.
Markit also said that its dropped to 52.8 in April from the prior month’s final reading of 53.3.
Analysts had expected an increase to 53.5.
The composite PMI, including activity in both sectors, slipped to 52.7 in April from the previous month’s reading of 53.0. That was its weakest reading since September 2016.
On the indices, a reading above 50.0 indicates expansion, below indicates contraction.
“The PMI data suggest the US economy lost further momentum at the start of the second quarter,” Markit chief economist Chris Williamson said.
“The surveys are signaling a GDP growth rate of 1.1% after 1.7% in the first quarter,” he added.
Williamson pointed out that the manufacturing sector showed signs of growth slowing further from the two-year high reached at the beginning of the year, despite export orders lifting higher.
He also noted that the labor market continued to soften with a step-down in the pace of hiring consistent with the creation of around only 100,000 non-farm payrolls.
“The survey responses indicate that some froth has come off the economy since the post-election bounce seen at the end of last year,” Williamson explained.
“However, with inflows of new business picking up slightly in April and business optimism about the year ahead also brightening, there’s good reason to believe that growth could revive again in coming months,” he concluded.
After the report, was trading at 1.0701 from around 1.0703 ahead of the release of the data, was at 1.2797 from 1.2788 earlier, while traded at 109.11 compared to 109.09 before the release.
The , which tracks the greenback against a basket of six major rivals, was at 99.82, compared to 99.81 ahead of the report.
Meanwhile, U.S. stocks were trading slightly lower after the open. The slipped 10 points or 0.05%, the lost 2 points, or 0.11%, while the tech-heavy fell 6 points or 0.11%.
Elsewhere, in the commodities market, traded at $1,283.50 a troy ounce, compared to $1,284.00 ahead of the data, while changed hands at $50.52, compared to $50.38 earlier.