Cryptocurrency investors have been closely monitoring U.S. economic indicators since the end of 2021 due to their significant impact on the cryptocurrency and Bitcoin (BTC) 
$64,421 markets. The latest preliminary Purchasing Managers’ Index (PMI) figures and an analysis by an S&P expert have offered reassuring insights for cryptocurrency investors.
Understanding the U.S. PMI Data
The PMI, or Purchasing Managers’ Index, is a critical tool for understanding the current effects of tariffs. It reveals that to sustain the narrative of limited inflation growth, the process through which sellers pass on costs must decelerate. This situation supports the expectation of tariffs imparting a one-off impact, benefiting key figures and, consequently, the cryptocurrency market.
Presently, Chris Williamson, Chief Economist at S&P Global Market Intelligence, highlights that tariffs continue to increase input costs in both manufacturing and service sectors. However, there’s a decline in companies able to offset these increases through higher prices, indicating narrowing margins and a potential slowdown in inflation.
Analysis of Recent Figures
The recent flash PMI data reveals that U.S. business activity growth slowed for the second consecutive month in September due to weakened demand. While growth persists in both manufacturing and services, it’s subdued, causing a deceleration in employment growth across both sectors.
Tariffs remain a major contributor to rising costs; however, the softening demand and intensified competition have restricted companies’ ability to increase prices. The recorded price hikes were at their lowest since April, with slower-than-expected sales contributing to the largest increase in factory stock levels on record.
Encouragingly, there is increased confidence regarding business prospects. Part of this optimism is attributed to expectations that lower interest rates will mitigate some adverse impacts of tariffs and broader policy uncertainties.
Interest rate reductions have already helped improve business confidence. Should inflation measures like PCE, CPI, and PPI also register limited increases, the Federal Reserve may continue its rate cuts, potentially stabilizing cryptocurrency growth. A scenario without surprises like “a sharp recovery in employment” is essential, as such developments might shift inflation back to a dominant focus, affecting economic priorities.
