US manufacturing PMI slide to 21-month low in March


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The Assembly Line at General Motors Flint Mount Factory

Numbers: The Markit IHS flash purchasing managers' index for the manufacturing sector reached its lowest level in 21 months in March, while the services PMI weakened to its lowest level in two months.

The manufacturing PMI flash fell to 52.5 against 53 in February, while that of services fell to 56.8 against 56.

Any reading above 50 indicates improved conditions. Flash reading is about 85% of the final number of responses received each month.

What happened: According to the report, new construction progressed at the weakest pace since April 2017, due to the cautious spending habits of customers and the less optimistic business climate. The latest data show the smallest increase since June 2017, the report says.

The readings abroad were worse. The eurozone flash manufacturing PMI fell to 47.6 in March, its lowest level in 71 months, while Germany slipped to 44.7, a low in 79 months for the biggest economy Europe.

The big picture: With bond yields

TMUBMUSD10Y, -3.80%

On the downside and reversal of the yield curve, worries about the United States and the global economy occupy a prominent place in traders' thinking. The US Federal Reserve reacted this week by reducing its expectations for interest rate hikes.

What they say:However, a gap has been created between the manufacturing and services sectors, with producers of goods and exporters struggling with the deterioration of the external environment and concerns over trade wars. The survey is consistent with the official measure of the decline in manufacturing output in March, which dampens the economy in the first quarter "- Chris Williamson, chief economist at IHS Markit.

Market reaction: The Dow Jones Industrial Average

DJIA, -1.06%

fell by nearly 200 points in early action.

Read also: Fed will not end economic expansion


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