Washington (Reuters) -The business activity almost stopped in February due to fear of importing on imports and deep reduction in the consumption of the Federal Government, deleting all gains recorded after the victory of President Donald Trump’s election.
Running in the activities of up to a 17-month low report on S&P Global on Friday was the latest in a series of polls suggesting that companies and consumers were becoming more and more widespread than Trump’s administration policies.
Business and consumer feelings rose after the Republic of the Republicans on November 5 in the hope for a less controversial regulatory environment, tax reduction and low inflation.
“Trump’s business honeymoon seems to be over,” said Kyle Chapman, an analyst of the FX market from Ballinger Group.
The S&P Global’s Flash US composite PMI exit index, which follows the production and services sectors, has dropped to 50.4 this month. That was the lowest reading of September 2023, and in January it was 52.7. Reading above 50 indicates spread in the private sector.
The services sector made a decline in PMI, contracting the first time since January 2023, production activity increased to eight months, although it was credited with “increasing potential costs in the front or shortage of supply of tariffs”.
Global S&P research was conducted between 10 to 20 February.
Trump struck an additional 10% of tariffs on Chinese imports in his first month. 25% of Imports from Mexico and Canada was suspended by March. Trump has raised tariffs to import steel and aluminum to 25%this month.
On Tuesday, he said he intended to impose car tariffs “in a 25%neighborhood” and similar duties on semiconductor and pharmaceutical imports. In addition, the cost of the Federal Government decreases, with thousands of workers from scientists to parking, mostly those on the usual trial, released by the billionaire of Elon Musk, the Ministry of Government Efficiency or Doge – the entity created by Trump.
“Companies report broad concerns about the impact of the Federal Government policy, ranging from consumption to tariffs and geopolitical development,” said Chris Williamson, the chief business economist of S&P Global Market Intelligence.
“The sale was allegedly hit by uncertainty caused by a variable political landscape, and prices increase due to increasing prices regarding the tariff from the supplier.”
Wall Street stocks were lower. The dollar grew in a currency basket. American cash register slid.
Wide worse
The feelings of the Homebuilder building hit a five-month low in February, and the tariffs were quoted for a reversal.
A survey from the University of Michigan on Friday showed that the consumer feelings index in February fell to a 15-month low than 64.7 from a final read of 71.7 in January. It was lower than preliminary reading 67.8.
Consumers 12-month inflation expectations have worsened to 4.3%, which has read the most since November 2023, with 3.3% in January. Over the next five years, consumers recorded inflation at 3.5%, which has been mostly since 1995, compared to 3.2% in January.
Federal reserves in January paused a cycle of policy relieving, reducing interest rates by 100 base points from September. The records of the US Central Bank meeting from 28 to 29 January announced on Wednesday showed that Trump’s initial proposals of politics have caused concerns in the Fed due to greater inflation.
“You can bet that President Powell and Company will consider it and that this further seals the case for the Fed that has remained on hold for a while,” said Stephen Stanley, the main American economist, Sandander US Capital Markets.
“The question is whether the President Trump and the administration pay attention to the acidic consumer mood for the threat of tariffs.”
The financial markets seemed to be worried about the weakening of the economy outweighed the fear of re -inflation, with futures contracts that had moved the prices of Fed policy in firmer chances for two decreasing interest rates this year, not just one. Market bets set the first incision by June and the second in October.
Meanwhile, inflation concerns were dominated by S&P GLOBAL research. Its price of prices that companies pay for inputs increased to 58.5 this month with 57.4 in January. He was reinforced by a production meter, which jumped 63.5 last month with 57.4, “he supervised the purchase of a tariff manager and related price price increases.”
Manufacturers have transferred the consumers higher prices, which could increase the costs of goods. The deflation of the goods made the slowdown of inflation.
Although companies with services also faced higher input prices, they seemed to absorb some of the increase because slowdown in demand increased competition, which could be good for the overall appearance for inflation, with the pressures on the price in recent months. The price measure charged with companies for their goods and services fell to 51.6 with 53.9 last month.
The measures of new orders received by private companies decreased to 50.6 this month with 53.7 in January. Its employment measure decreased to 49.4 with 54.0 in January.
Flash Manufacturing PMI increased to 51.6 out of 51.2 in January. The economists surveyed by Reuters forecast PMI production at 51.5.
His Flash Services PMI fell to 49.7, which is the first contraction in just over two years, with 52.9 last month. This confused the expectations of economists to read 53.0.
The SLOB of weak reports spread to the apartment market.
The National Real Estate Association announced in the third report that the sale of homes in previous ownership reduced 4.9% in January to a seasonally adapted annual rate of 4.08 million units, blamed for high mortgage rates and home prices. The mortgage rates are accompanied by a yield on a 10-year state note, which remains elevated in the midst of the resistance of the economy and stubborn inflation.
There are also concerns that the tariffs would increase the costs of building materials, including wood and devices, making it difficult for the builders to close the lack of housing care that holds the house appreciates elevated and reducing accessibility.
“Given that the borrowing costs have remained above 7%, we expect that weakness in buying activities will continue in the coming months,” said Bradley Saunders, an economist of North America from Capital Economics.
