The Institute
for Supply Management (ISM) reported on Monday that its Services PMI came in at
51.6 per cent in April, registering a gain of 0.8 percentage point from an unrevised March reading of 50.8 per cent. The latest figure indicated that economic
activity in the U.S. services sector grew for the 10th successive month in April
and at a faster pace than in the previous
month.
Economists had expected
the indicator to slip to 50.6 in April.
A reading above
50 signals expansion, while a reading below 50 indicates contraction.
According to
the report, the Production index fell 2.2 percentage points to 53.7 per cent last
month, pointing
to the 59th straight month of expansion in production across the services
sector. Meanwhile, the New Orders gauge increased by 1.9 percentage points to 52.3
per cent, indicating new orders grew for the 10th consecutive month. The Employment
measure jumped by 2.8 percentage points to 49.0 per cent, implying employment
activity in the services sector contracted in April for the second month in a
row. Elsewhere, the Supplier Deliveries indicator advanced 0.7 percentage point
to 51.3 per cent, pointing to a slower supplier
performance for the fifth consecutive month. The Inventories indicator climbed 3.1
percentage points to 53.4 per cent, remaining in expansion territory for the third
successive month. On the price front, the Prices index soared 4.2 percentage
points to 65.1 per cent, suggesting that prices paid by services organisations for materials and
services increased in April for the 95th month running.
Commenting on
the data, Steve Miller, Chair of the Institute for Supply Management (ISM)
Services Business Survey Committee, said that 11 industries reported expansion
in April, a drop of three from the 14 industries reported in January and
February. He also noted that April's change in indexes was a reversal of
March's direction, with increases in three - New Orders, Employment and
Supplier Deliveries - of the four sub-indexes that directly factor into the
Services PMI. “Respondents continue to mention federal agency budget cuts as a
drag on business, but overall, results are improving,” headed. “Regarding
tariffs, respondents cited actual pricing impacts as concerns, more so than
uncertainty and future pressures.”