The ISM Services Index decreased 2 percentage points (pp) to 49.4% – the first month of contraction since December 2022.
“Twelve industries reported growth in April. The Services PMI® — through 15 consecutive months of growth after a single month of contraction in December 2022 and a prior 30-month period of expansion — had been indicating sustained growth for the sector. But the reading of under 50 percent in April reflects month-over-month contraction,” said Anthony Nieves, Chair of the ISM Services Business Survey Committee.
The Business Activity Index registered 50.9% in April, which is 6.5 pp lower than the 57.4% recorded in March. The Supplier Deliveries Index contracted for the third straight month after one month in expansion (or ‘slower’) territory in January, registering 48.5%, 3.1 pp higher than the 45.4% recorded in March. (A reading of below 50 percent indicates faster deliveries). The Prices Index registered 59.2% in April, a 5.8 pp increase from March’s reading of 53.4%. Respondents commented: “Although it varies by global region, we’re starting to see market softening in terms of price and lead time stability. That bidders are providing reasonable bid validities is an indication that much of the supply chain is coming into supply and demand equilibrium. Electrical equipment remains the outlier.” (Construction)
The Inventories Index grew in April, registering 53.7%, an increase of 8.1 pp from March’s figure of 45.6% and the Employment Index registered at 45.9%, a 2.6 pp decrease from March. Respondents commented: “Steady demand has been favorable during this traditionally slower season. Pricing is stable and the supply chain is strong. Employee recruitment and retention has been a challenge in some areas; however, the situation isn’t critical.” (Retail Trade)
The Inventory Sentiment Index expanded for the 12th consecutive month, registering at 62.9%, up 7.2 pp from March’s reading of 55.7%. This reading indicates that respondents feel their inventories are too high when correlated to business activity levels.
Read the ISM release.
