After three months over 50, S&P's manufacturing PMI sank back below this breakeven level but only fractionally at 49.9 in April. Yet the degree of the decline of 2 full points from March's 51.9 will be pulling forecasts down for the closely watched ISM manufacturing index which in March jumped 2.5 points to 50.3 for its first 50 score since late 2022.

S&P's services index did soften by 6 tenths to 50.9 but its run of plus-50 scores going back to early last year is still intact. Looking at these contrasting headline trends between services and manufacturing helps explain the trouble facing the Federal Reserve: in contrast to goods prices, services prices remain elevated and are slowing moderation in overall consumer prices.

Yet there are signs that manufacturing may be picking up steam of its own, whether trends earlier this year in S&P's report or March's ISM report or last week's Philadelphia Fed report for April. All these raise the question whether goods prices may begin to pick steam and pose a second threat to price stability. April input costs for S&P's manufacturing report, for example, are at a one-year high.

Nevertheless, April's aggregate flash data do point to slowing demand including the first overall reduction in new orders in six months. This resulted in the first scaling back of employment in almost four years. Business sentiment understandably dipped to a five-month low both in the manufacturing and services samples.

April's consensus for the manufacturing flash is 51.9 which would match March's final; for services, the consensus is also 51.9 versus 51.7.

The flash Composite Purchasing Managers' Index (PMI) provides an early estimate of current private sector output by combining information obtained from surveys of around 1,000 manufacturing and service sector companies. The flash data are released around 10 days ahead of the final report and are typically based upon around 85 percent of the full survey sample. The report tracks changes in variables such as new orders, stock levels, employment and prices across both manufacturing and services. Production is also tracked, defined as"production" for manufacturing and"output" for services. Results are synthesized into a single index which can range between zero and 100. A reading above (below) 50 signals rising (falling) output versus the previous month and the closer to 100 (zero) the faster output is growing (contracting). The report also contains flash estimates of the manufacturing and services PMIs. The data are produced by S&P Global.

Investors need to keep their fingers on the pulse of the economy because it dictates how various types of investments will perform. By tracking economic data such as the purchasing managers' manufacturing indexes, investors will know what the economic backdrop is for the various markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly and causing potential inflationary pressures.