This squares more with what the Beige Book said on the US economy/Home sales

The April US services and manufacturing PMI fell to 50.9 from 52.1 and that matches the lowest print since November 2023. Manufacturing slipped back under 50, by a hair, at 49.9 from 51.9. Services moderated to 50.9 from 51.7. Of note, “inflows of new business fell for the 1^st time in six months and firms’ future output expectations slipped to a 5 month low amid heightened concern about the outlook.”

Here were some other snippets from the press release:

“Some service providers suggested that elevated interest rates and high prices had restricted demand during the month.” Employment weakened as “The overall reduction in workforce numbers was centered on services, where employment decreased solidly and to the largest extent since mid 2020. In fact, excluding the opening wave of Covid, the decline in services staffing levels in April was the most pronounced since the end of 2009.” Price pressures did ease though, “Service providers often noted higher staff and shipping costs, though reported the 2^nd lowest overall cost increase for 3 ½ years.” On the pass thru side, “output prices increased at a solid but slower rate during April,” though off a 10 month high in March. I bolded for emphasis as it’s another anecdote that doesn’t fit with the BLS payroll data.

We know a key drag on manufacturing has been a few things. One, the shift to spending on services from goods, the desire on the part of many retailers to have lean inventories and the lack of desire to restock those inventories because of uneven end demand. S&P Global said, “US manufacturers drew down their stocks of purchases for the 2^nd consecutive month in April, and to a solid degree that was the most marked since August last year. Firms made some efforts to limit the pace of depletion, however, raising their purchasing activity slightly following a fall in the previous survey period.” And inventories on the whole did tick up but not for good reason, “the slight rise in post-production inventories reflected a slowdown in demand which left firms holding unsold goods.”