Image Source: PexelsEconomic activity in the services sector contracted in April for the first time since December 2022, ending a period of 15 consecutive months of growth.
ISM chart and excerpts below by permission from the Institute for Supply Management® ISM®The April ISM Services Report on Business show Services and Manufacturing are both in contraction.
Economic activity in the services sector contracted in April for the first time since December 2022, ending a period of 15 consecutive months of growth, say the nation’s purchasing and supply executives in the latest Services ISM® Report On Business®. The Services PMI® registered 49.4 percent; it indicated sector expansion in 45 of the previous 47 months.
The report was issued today by Anthony Nieves, CPSM, C.P.M., A.P.P., CFPM, Chair of the Institute for Supply Management® Services Business Survey Committee
A Services PMI® above 49 percent, over time, generally indicates an expansion of the overall economy. Therefore, the April Services PMI® indicates the overall economy is growing for the 16th consecutive month. Nieves says, “The past relationship between the Services PMI® and the overall economy indicates that the Services PMI® for April (49.4 percent) corresponds to a 0.2-percent increase in real gross domestic product (GDP) on an annualized basis.”
“The decline in the composite index in April is a result of lower business activity, slower new orders growth, faster supplier deliveries and the continued contraction in employment. Survey respondents indicated that overall business is generally slowing, with rates varying by company and industry. Employment challenges continue to be primarily due to difficulties in backfilling positions and/or controlling labor expenses. The majority of respondents indicate that inflation and geopolitical issues remain concerns.”
Employment
The five industries reporting an increase in employment in April are: Accommodation & Food Services; Management of Companies & Support Services; Construction; Mining; and Utilities. The 10 industries reporting a decrease in employment in April — listed in order — are: Other Services; Real Estate, Rental & Leasing; Information; Finance & Insurance; Wholesale Trade; Retail Trade; Public Administration; Transportation & Warehousing; Health Care & Social Assistance; and Professional, Scientific & Technical Services.
Prices
Prices paid by services organizations for materials and services increased in April for the 83rd consecutive month. The Prices Index registered 59.2 percent, 5.8 percentage points higher than the 53.4 percent registered in March. The April reading is the 22nd in a row near or below 70 percent (including 12 of the last 13 months at or below 60 percent), following 10 straight months of readings near or above 80 percent from September 2021 to June 2022.
Fourteen services industries reported an increase in prices paid during the month of April, in the following order: Construction; Management of Companies & Support Services; Public Administration; Other Services; Retail Trade; Accommodation & Food Services; Educational Services; Finance & Insurance; Real Estate, Rental & Leasing; Wholesale Trade; Information; Utilities; Health Care & Social Assistance; and Professional, Scientific & Technical Services. No industry reported a decrease in prices for the month of April.
The above line caught my attention. “No industry reported a decrease in prices for the month of April.” And prices paid by service organizations have been increasing for 83 consecutive months.I would be interested in prices received by service organizations, but ISM does not capture that data.
Manufacturing ISM Moves Back Into Contraction
ISM chart and excerpts below by permission from the Institute for Supply Management® ISM®On May 1, I noted Manufacturing ISM Moves Back Into Contraction, New Orders Decline
The ISM manufacturing index is back in contraction after a one month reprieve, but prices expand sharply. It’s a bad mix.
Jobs Up a Less Than Expected 175,000 in April
Nonfarm payrolls and employment levels from the BLS, chart by Mish.On Friday, I noted Jobs Up a Less Than Expected 175,000 in April
The stock and bond markets are salivating today[Friday] because nonfarm payrolls are only up 175,000 vs a Bloomberg Econoday expectation of 243,000.
Is anyone watching prices?OK, Average Hourly Earnings of All Nonfarm Workers rose $0.07 to $34.75. A year ago the average wage was $33.44. That’s a gain of 3.9%. So we have a slowdown in year-over-year wage growth. But let’s see what happens next month when California raises minimum wages to $20 per hour for fast food workers.
Understatement of the Day: The Fed Notes “Lack of Progress” on Inflation
On May 1, I commented on the Understatement of the Day: The Fed Notes “Lack of Progress” on Inflation. But on Friday, all such concerns vanished. Let’s see.More By This Author:Jobs Up A Less Than Expected 175,000 In AprilHome Prices Hit New Record High, Don’t Worry, It’s Not InflationTesla Is Scaling Back Superchargers, Rescinding Offers, Firing More Workers
