US factory and service output levels at seven-month lows in April

The US economy softened at the start of the year, with levels of output in both the manufacturing and services sectors dipping to seven-month lows, the results of a survey showed, but economists believed there were good reasons to expect a rebound going forward.

IHS Markit's purchasing managers' index for America's factory sector slipped to a seven-month low of 52.8 for March, down from the prior month's reading of 53.3, driven by slower rates of output growth and new orders.

That undershot forecasts calling for a reading of 53.5.

In January, the rate of growth in manufacturing hit a nearly two-year high.

Similarly, a 'composite' gauge linked to both manufacturing and services output levels fell from 53.0 in March to 52.7 for April.

Commenting on the 'flash' PMI data, Chris Williamson, Chief Business Economist at IHS Markit said: "The survey responses indicate that some froth has come off the economy since the post-election bounce seen at the end of last year."

According to Williamson, the survey results pointed to a slowdown in GDP growth from 1.7% in the first quarter to 1.1% for the second.

They were also consistent with a drop in monthly non-farm payrolls to around only 100,000.

Nonetheless, he added: "However, with inflows of new business picking up slightly in April and business optimism about the year ahead also brightening, there’s good reason to believe that growth could revive again in coming months."