S&P Global published the April flash US Composite PMI on Thursday, with the index rising to 52 from 50.3 in March. The report said overall business activity growth picked up slightly in April after slowing to near-stagnation in March.
Manufacturing output improved, with the Manufacturing PMI at 54 versus 52.3 previously and above the 52.5 forecast. The Services PMI rose to 51.3 from 49.8, exceeding the 50.0 forecast.
April Flash PMI Summary
Earlier estimates had pointed to Manufacturing PMI at 52.5 from 52.3 and Services PMI at 50.0 after 49.8, with readings below 50.0 indicating contraction. The March Composite PMI was 50.3.
Ahead of the release, EUR/USD was 0.2% lower near 1.1680, with the pair above the 38.2% Fibonacci level at 1.1666 and below the 20-period EMA at 1.1689. The RSI was 50.2, with resistance at 1.1689, 1.1745, 1.1825, 1.1938 and 1.2082, and support at 1.1666, 1.1567 and 1.1408.
The Composite PMI is a monthly survey-based index of US private activity in manufacturing and services, ranging from 0 to 100, where 50.0 indicates no change. It can be used to anticipate shifts in GDP, industrial production, employment and inflation.
Today’s flash PMI data for April came in stronger than we anticipated, showing a rebound in business activity after the slowdown in March. This resilience suggests the US economy is absorbing the impact of recent geopolitical events better than the market feared. With the composite index at 52, it signals expansion that could keep inflation persistent and delay any potential interest rate cuts from the Federal Reserve.
Market Implications And Positioning
We should consider this a bullish signal for the US dollar in the coming weeks. The unexpectedly strong data, especially when paired with the latest Consumer Price Index report showing core inflation still stubbornly above 3%, strengthens the case for the Fed to hold rates higher for longer. This creates a favorable environment for long dollar positions, perhaps through buying call options on USD-centric pairs, as the policy divergence with other central banks may widen.
For equity index traders, this news introduces a layer of complexity and potential volatility. While a growing economy is fundamentally good for corporate earnings, the implication of sustained high interest rates can pressure stock valuations, a dynamic we saw for much of 2025. We believe strategies that benefit from or hedge against increased choppiness, such as buying VIX call options or establishing collars on S&P 500 positions, are now more attractive.
In the interest rate markets, this data forces a repricing of expectations away from imminent rate cuts. Looking at federal funds futures, the probability of a summer rate cut has likely diminished significantly following this report, a sharp reversal from the sentiment just a few weeks ago. We see an opportunity in positioning for this shift by selling short-term interest rate futures, betting that the market will have to push its timeline for Fed easing further out into late 2026 or even 2027.
However, we must note the report’s mention of “subdued” expansion and faltering demand in the services sector. This indicates the economic recovery is not uniform and could be fragile, a pattern that echoes the mixed signals we observed throughout the second half of 2025. Therefore, while we adjust for a stronger near-term outlook, holding some protective put options remains a prudent hedge against the possibility that this PMI bounce is short-lived.
