Washington (Reuters) -Business activity stopped in February in the midst of mounting fears over tariffs on imports and deep cuts in federal government spending, eliminating all the proceeds identified following the victory of President Donald Trump's election.
The clothes in a 17 -month low activity reported by S&P Global on Friday were the latest in a series of surveys to suggest that businesses and consumers are increasingly rushed by Trump's administration policies.
Business sentiment and consumers following the Republican's victory on November 5 rose on hopes for a less string regulatory environment, tax cuts and low inflation.
“Trump's business honeymoon is over, it seems,” said Kyle Chapman, FX markets analyst at Ballinger Group.
The S&P Global's Flash US composite PMI output index, which tracks the manufacturing and services sectors, fell to 50.4 this month. That was the lowest reading since September 2023 and was down from 52.7 in January. A reading above 50 indicates expansion in the private sector.
The services sector accounted for the fall in the PMI, contracting for the first time since January 2023. Manufacturing activity rose to eight -month heights, although attributed to “front -potential cost increases or supply shortages related to tariffs. “
The S&P Global Survey took place between February 10-20.
Trump in his first month in the slapping post did an additional 10% tariff on Chinese imports. A 25% levy on imports from Mexico and Canada was suspended until March. Trump this month rose tariffs on steel and aluminum imports to 25%.
He said on Tuesday that he plans to impose car tariffs “in the neighborhood of 25%” and similar duties on semi -conductors and pharmaceutical imports. In addition, federal government expenditure is being broken, with thousands of workers from scientists to ranger parkers, mainly on trial, fired by the government's efficiency department of billionaire Elon Musk, or Doge – an entity created by Trump.
“Companies report widespread concerns about the impact of federal government policies, ranging from spending cuts to geopolitical tariffs and developments,” said Chris Williamson, chief business economist at S&P Global Market Intelligence.
“Sales are said to be hit by the uncertainty caused by the changing political landscape, and prices are rising in the midst of tariff -related price increases from suppliers.”
Stocks on Wall Street were lower. He picked up the dollar against a basket of currency. The US Treasury product slipped.
Wide decline
The feeling of a home builder struck a minimum of five months in February, with tariffs quoted for the reversal.
A survey of Michigan University on Friday showed that its consumer sentiment index had dropped to a minimum of 15 months of 64.7 in February of a final reading of 71.7 in January. That was lower than a preliminary reading 67.8.
Consumer 12 -month inflation expectations declined to 4.3%, the highest reading since November 2023, from 3.3% in January. Over the next five years consumers saw inflation running at 3.5%, the highest since 1995, compared to 3.2% in January.
The Federal Fund in January paused its policy relief cycle, after cutting 100 -point interest rates cut since September. The minutes of the US Central Bank meeting January 28-29 announced on Wednesday showed that Trump's initial policy proposals had raised concern in the Fed about higher inflation.
“You can bet that the Chairman Powell and the company will note that and this seals the case further for the remaining Fed for a while,” said Stephen Stanley, US chief economist, Santander's capital markets Ud.
“The question is whether President Trump and the administration pay attention to the source of consumer mood because of the threat of tariffs.”
In financial markets, however, concern about a weakening economy appeared to outweigh the fear of proper inflation, with future contracts settling to value Fed policy rates in a firmer chance of two cuts in interest rate this year, in rather than just one. Market bets gave the first cut so likely by June, and the second as early as October.
In the meantime, inflationary concerns were dominated in the Global S&P survey. Its measure of prices paid by businesses increased for inputs to 58.5 this month from 57.4 in January. He received a boost from the manufacturing meter, which jumped to 63.5 from 57.4 last month, “overwhelmingly blamed by purchasing managers on related price -driven tariffs and hikes.”
Manufacturers transferred the higher prices to consumers, which could raise the cost of goods. The deflation of goods has accounted for the slowdown in inflation.
Although service businesses also faced higher prices for inputs, they seemed to absorb some of the increase as demand slowed boosted competition, which could bod well for the overall inflation forecast, with pressure Prices tend to be higher in recent months. A measure of prices raised by businesses for their goods and services fell to 51.6 from 53.9 last month.
The survey measure of new orders received by private businesses fell to 50.6 this month from 53.7 in January. Its employment measure fell to 49.4 from 54.0 in January.
PMI flash manufacturing marginalized the survey up to 51.6 of 51.2 in January. Economists surveyed by Reuters had predicted that the manufacturing PMI will rise to 51.5.
His PMI services fell to 49.7, the first shrinkage in just over two years, from 52.9 last month. That confused economists' expectations for a 53.0 reading.
The many weak reports stretched to the housing market.
The National Realtors Association said in a third report that sales of front -owned homes fell by 4.9% in January to an annual seasonally modified rate of 4.08 million units, blamed at high mortgage rates and house prices . Mortgage rates track the product on the 10 -year Treasury note, which remains high in the midst of the stubborn resilience and inflation of the economy.
There are also concerns that tariffs would raise the cost of building materials, including lumber and equipment, making it more difficult for builders to close national housing shortages that keep house prices higher and reduce affordability.
“Given that borrowing costs have remained above 7%, we expect this weakness in a purchase activity to continue in the coming months,” said Bradley Saunders, a North American economist at Capital Economics.
(Reported by Lucia Mutikani; Additional Reports by Dan Burns; Edited by Chizu Nomiyama and Andrea Ricci)
