Washington (Reuters) -HUS Business activities almost stuck in February in the midst of increasing fears on imports and deep cuts in the expenditure of the federal government, so that all the profit was erased in the aftermath of the election victory of President Donald Trump.
The tumbling in activity to a low-point of 17 months reported by S&P Global on Friday was the last in a series of surveys that suggest that companies and consumers are increasingly rattling through the policy of the Trump administration.
After the victory of the Republican, business and consumer sentiment rose on the hope for less strict regulations, tax reductions and low inflation on 5 November.
“The honeymoon of Trump Business is over, it seems,” said Kyle Chapman, FX Markets Analyst at Ballinger Group.
The Flash US Composite PMI output index from S&P Global, which follows the production and service sectors, dropped to 50.4 this month. That was the lowest reading since September 2023 and had fallen from 52.7 in January. A lecture above 50 indicates expansion in the private sector.
The Services sector was good for the fall in the PMI, which contracts for the first time since January 2023. The production activity increased to an eight -month high, although this was attributed to “potential cost increases for the front or delivery shortages linked to rates.”
The S&P Global Survey was performed between 10-20 February.
In his first month at the office, Trump hit an extra rate of 10% on Chinese import. A levy of 25% on import from Mexico and Canada was suspended until March. This month Trump raised rates on steel and aluminum import to 25%.
He said on Tuesday that he intended to impose automatic rates “near 25%” and similar tasks on semiconductors and pharmaceutical imports. In addition, the expenditure of the federal government is reduced, with thousands of employees from scientists to Park Rangers, usually those on trial, fired by billionaire Elon Musk’s Department of Government Efficiency or Doge – founded by Trump.
“Companies report widespread concern about the impact of federal government policy, ranging from cutbacks on rates and geopolitical developments,” said Chris Williamson, main business economist at S&P Global Market Intelligence.
“Allegedly the sale is affected by the uncertainty caused by the changing political landscape and prices rise in the midst of rate -related price increases of suppliers.”
Stocks on Wall Street were lower. The dollar rose against a basket with currency. US Treasury proceeds have been slipped.
Wide deterioration
Homebuilder-sentiment reached a low-month-old low in February, with rates that are cited for the reversal.
A study by the University of Michigan on Friday showed that the consumer student index fell to a low 15 -month low of 64.7 of a final reading of 71.7 in January. That was lower than the provisional reading of 67.8.
The 12 -month inflation expectations of consumers deteriorated to 4.3%, the highest reading since November 2023, of 3.3% in January. In the next five years, consumers saw inflation lasting by 3.5%, the highest since 1995, compared to 3.2% in January.
The Federal Reserve paused its policy planting cycle in January and had lowered the interest rates with 100 basic points since September. Minutes of the meeting of January 28-29 of the US Central Bank that was published on Wednesday showed that Trump’s first policy proposals concerned the FED about higher inflation.
“You can bet that chairman Powell and Company will take this into account and that this further seals the case for the Fed that will be on hold for a while,” says Stephen Stanley, head -american economist, Santander US Capital Markets.
“The question is whether President Trump and the administration pay attention to the acidification of a consumer mood because of the threat of rates.”
In the financial markets, however, the concern about a weakening economy seemed to outweigh the fear of revival of inflation, with futures contracts that establish themselves on the policy prices of the FED in a stronger chance of two interest rate cuts this year, instead of just one . Market betting set the first reduction in June and second place as soon as October.
Inflation problems meanwhile dominated in the research of the S&P Global. The degree of prices paid by companies for input rose this month to 58.5 of 57.4 in January. It was stimulated by the production meter, which last month from 57.4 to 63.5 jumped, “overwhelmingly accused by purchasing managers of rates and related supplier -controlled price increases.”
Manufacturers have passed on the higher prices to consumers, which could increase the costs of goods. The delay in inflation has justified the delay.
Although service companies also had to deal with higher prices for inputs, they seemed to absorb part of the increase because delaying demand stimulated competition, which could predict well for the total inflation views, with price pressure that has been higher in recent months. A degree of prices that companies charge for their goods and services fell to 51.6 of 53.9 last month.
The measure of the survey for new orders received by private companies fell this month to 50.6 from 53.7 in January. The degree of employment fell to 49.4 from 54.0 in January.
The flash manufacturing PMI of the survey increased in January to 51.6 from 51.2. Economists interviewed by Reuters had predicted the production -pmi to 51.5.
The PMI of the Flash Services fell to 49.7, the first contraction in just over two years, from 52.9 last month. That confused the expectations of economists for a lecture of 53.0.
The raft of weak reports extended to the housing market.
The National Association of Realtors said in a third report that the sale of earlier ownership of Huizen in January fell by 4.9% to a seasonal annual percentage of 4.08 million units, blamed for high mortgage interest and house prices. Mortgage interest rate follows the return on the 10-year-old Treasury Note, which remains increased in the midst of the resilience of the economy and stubborn inflation.
There are also concerns that rates would increase the costs of building materials, including wood and devices,, making it more difficult for builders to close a national housing shortage that keeps house prices increasing and reducing affordability.
“Given that the loan costs have remained more than 7%, we expect that this weakness will continue in the coming months,” said Bradley Saunders, economist in North America at Capital Economics.
(Reporting by Lucia Mutikani; Additional reporting by Dan Burns; adaptation by Chizu Nomiyama and Andrea Ricci)
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