US Business Activity Rebounds in April 2026: Washington

Key Points

• The S&P Global flash US Composite PMI Output Index rose to 52.0 in April 2026, up from 50.3 in March, indicating a modest pickup in private‑sector business activity after near‑stagnation in the prior month.
• The manufacturing PMI jumped to 54.0 in April, its highest level since May 2022 and a 47‑month high, with the Manufacturing Output Index reaching 55.7, the fastest factory‑output growth in four years.
• The services‑sector business‑activity index rose to 51.3 from 49.8, the first expansion in two months but the second‑weakest pace in about a year, reflecting ongoing weakness in domestic and export demand.
• Supplier delivery times to factories deteriorated to the longest since August 2022, with companies citing disruptions linked both to the war in the Middle East and to the build‑up of safety stocks.
• The PMI measure of output prices climbed to 59.9 in April, the highest since July 2022, while input‑price inflation rose to 62.6, an 11‑month high and the second‑highest level in over three years.
• Private‑sector employment edged up to 50.2 in April after a dip to 49.7 in March, with factory headcounts falling and service‑sector staffing barely rising, marking the weakest twin‑month employment picture since late 2024.
• S&P Global’s chief business economist, Chris Williamson, said the April PMI is consistent with annualised growth of barely more than 1%, with the services sector acting as the main drag, while the Middle East war is the central factor behind the weakest three‑month expansion since early 2024.

Washington (Evening Washington News) April 23, 2026 – U.S. business activity has edged back into modest expansion in April after nearly stalling in March, as manufacturers increased output and ordered ahead of further supply‑chain disruptions tied to the war with Iran, according to the S&P Global flash PMI survey. The headline flash US Composite PMI Output Index climbed to 52.0 in April from 50.3 in March, a three‑month high that still runs well below the growth rates typically seen in 2025.

As reported by S&P Global Market Intelligence, the rebound follows a reading of 50.3 in March, the lowest composite figure since September 2023 and indicative of virtual standstill in the private sector. Chris Williamson, chief business economist at S&P Global Market Intelligence, said in a statement:

“A rebound in business output growth in April is good news after the near‑stagnation seen in March, but over the past three months we have seen the weakest expansion of output recorded since the start of 2024 with the war in the Middle East squarely to blame.”

Williamson added that the April PMI is broadly consistent with the economy struggling to manage annualised growth of more than 1%, with the vast services sector acting as the principal drag.

What is driving the manufacturing rebound and why has factory output surged?

The manufacturing‑sector component of the composite PMI rose to 54.0 in April from 52.3 in March, its highest level since May 2022 and a 47‑month high.

The S&P Global Manufacturing Output Index advanced to 55.7, the fastest pace of factory‑output growth in four years, driven by the largest influx of new orders since May 2022.

According to the S&P Global press release, the jump in new orders was “driven by domestic demand,” even as export sales of goods fell at an increased rate. Firms reported

“stock building in the face of concerns over supply availability and price hikes,”

with survey respondents referencing “panic” and “emergency” buying ahead of expected shortages and higher costs, echoing patterns seen during the pandemic.

Williamson said in the S&P Global statement that here

“an expansion of output and orders could be partly traced to the building of safety stocks,”

underscoring the degree to which the Middle East war is influencing corporate behaviour.

Why is the services sector still holding business growth back?

The services‑sector business‑activity index recovered to 51.3 in April from 49.8 in March, the first expansion in two months but still the second‑weakest growth in roughly a year.

The rate of increase in new business at service providers was the slowest in about two years, led by a further cooling of export demand and hesitancy among households and businesses to spend.

S&P Global’s survey notes that lost sales were frequently linked by companies to

“the uncertainty and disruption caused by the war in the Middle East alongside other government policies and affordability issues.”

Williamson said in the S&P Global release that

“orders for services ranging from travel and tourism to financial products barely rose as the war caused hesitancy for spending among both household and business customers, with surging prices and the prospect of higher borrowing costs acting as a further deterrent.”

This pattern leaves the services sector as the main brake on faster overall growth, even as manufacturing shows a sharper rebound.

How is the war with Iran disrupting supply chains and pushing delivery times to multi‑year highs?

What are companies saying about supplier delays and safety‑stock buying?

War‑related disruptions have sharply worsened supplier delivery times, particularly for manufacturers. S&P Global reported that factories faced the longest average delivery times since August 2022, extending a trend that has now endured for eight months. The firm noted that

“in addition to shipping‑related disruptions due to the war, shortages were also linked to the additional purchasing of safety stocks.”

Purchasing activity by firms rose at the second‑fastest rate in nearly four years, surpassed only by a spike seen shortly after tariff‑related measures in the previous spring. S&P Global’s data show that the Supplier Delivery Times index worsened to the greatest extent since August 2022, partly because vendors were dealing with both logistical bottlenecks and the surge in precautionary orders. Williamson said in the S&P Global statement that

“the war‑related issues led to increasingly widespread supply problems, adding to existing challenges related to tariffs,”

which together have constrained the flow of inputs to factories.

How much are prices for goods and services rising, and what does this mean for inflation?

The S&P Global survey’s output‑price index leapt to 59.9 in April, the highest reading since July 2022, marking the fastest increase in average prices charged for goods and services since mid‑2022. The index for prices paid by businesses for inputs climbed to 62.6, an 11‑month high and the second‑strongest increase in over three years.

Manufacturing‑sector input‑cost inflation hit a ten‑month high, while service‑sector input costs rose to their highest level since December and among the sharpest in the past three years. Williamson said in the S&P Global release that

“input cost inflation accelerated and supply delays worsened at a pace not seen since mid‑2022, contributing to the largest monthly jump in average selling prices for goods and services since July 2022,”

and added that

“the overall inflation picture is now the most worrying for almost four years.”

What do the latest employment figures suggest about the labour market?

Private‑sector employment rose only marginally in April, with the PMI employment gauge edging up to 50.2 from 49.7 in March.

This virtually flat picture represents the weakest back‑to‑back performance for employment since late 2024, with manufacturing headcounts dropping for the first time in nine months and services seeing only a slight return to jobs growth.

S&P Global noted that the weak employment trend partly reflected resignations and persistent labour‑supply shortages, while some companies also cited concerns over the need to cut staffing costs amid uncertain demand and elevated input prices.

The service‑sector employment index remained near the break‑even level, indicating that many service firms are holding staffing steady rather than expanding, while factory payrolls fell despite the pick‑up in output.

How are business expectations for the coming year shaping up after the April data?

Company expectations for output over the next 12 months improved in April but remained historically low, S&P Global’s release said. Sentiment was especially subdued in the services sector, though it ticked up from March, while manufacturers were the most optimistic they have been since February 2025 and among the most positive since the pandemic.

S&P Global attributed this uplift in manufacturing sentiment to the recent surge in orders, additional investment in marketing, and hopes of tariff‑driven reshoring of production. However, it noted that concerns about the war’s impact on prices and supply availability were still

“exacerbating existing worries over the cost of living and government policies,”

which continues to weigh on confidence, particularly in services.

Background: What this development means for the broader economic picture

The latest S&P Global flash PMI data sit at the intersection of a fragile recovery in US business activity and a sharp intensification of war‑related inflation pressures. Over the past year, the US economy has been marked by slower‑than‑trend growth, elevated interest rates and a series of trade‑policy shifts under President Donald Trump, all of which have kept corporate sentiment cautious.

The outbreak of the US‑Israel war with Iran in late February 2026, including Washington’s extension of a naval blockade and the effective closure of part of the Strait of Hormuz, has added a new layer of supply‑chain disruption and energy‑price volatility that directly feeds into producer and consumer prices.

The S&P Global composite‑PMI methodology, which weights factory output and services‑sector activity, has historically been followed closely by the Federal Reserve and financial markets as an early‑read indicator of the business cycle.

The fact that the April composite index sits at 52.0, while still above the 50 threshold for expansion, is well below the stronger readings seen in 2025 and signals that the economy is operating closer to the edge of stagnation than to robust growth. Within this context, the pronounced divergence between resurgent manufacturing and subdued services underscores how the war‑driven build‑up of safety stocks can temporarily lift headline activity without necessarily reflecting a broad‑based strengthening of final demand.

Prediction: How this development could affect different audiences

For policymakers at the Federal Reserve, the April PMI data increase pressure to delay any near‑term cuts in interest rates, because inflation‑pressure indicators are now at their highest levels in nearly four years even as underlying growth remains modest. If the trajectory of output prices continues to mirror the PMI’s signal, the central bank may feel constrained to keep borrowing costs elevated despite the risk of further slowing the already fragile services sector, which accounts for the bulk of US GDP.

For businesses and investors, the combination of stronger manufacturing activity and deeper supply‑chain disruptions implies that companies will likely continue to hold higher inventories and pass on rising input costs, which could keep profit margins under pressure even as revenues rise. Service‑sector firms, particularly those exposed to travel, tourism and cross‑border financial activity, may need to recalibrate growth plans around weaker demand and higher operating costs, while manufacturers may benefit from the near‑term inventory‑driven boost but face risks if the Middle East conflict prolongs or escalates.