The ISM Services Index increased to 51.6%, 0.8 percentage points (pp) higher than the March figure of 50.8%
“Eleven industries reported growth in April, a drop of three from the 14 industries reported in January and February. The Services PMI® has expanded in 55 of the last 58 months dating back to June 2020. The April reading of 51.6% is 1 pp below the 12-month average reading of 52.6%.” “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 subindexes that directly factor into the Services PMI®. Of those four, only the Business Activity Index had a lower reading compared to March. Employment continues to be the only one of these subindexes in contraction territory, with two straight months of contraction. From December through February, all four subindexes were in expansion. Regarding tariffs, respondents cited actual pricing impacts as concerns, more so than uncertainty and future pressures,” said Steve Miller, CPSM, CSCP, Chair of the Institute for Supply Management® (ISM®) Services Business Survey Committee.
Business Activity Index registered 53.7% in April, 2.2 pp lower than the 55.9% recorded in March, a 59th straight month of expansion. The Business Activity Index has been in expansion territory since its coronavirus pandemic lows. Comments from respondents include: “We are seeing a more conservative approach both domestically and internationally as a result of the current U.S. policies” and “People rushing to purchase vehicles in advance of the tariffs.” Respondents commented: ““The tariff uncertainty is causing a lot of consumption of human capital. We are starting to see some tariff charges, some are significant given the price of the highly specialized units that were ordered over two years ago. Based on our spend over the last couple of years, we will have to adjust our capital and operations and maintenance plans.” (Utilities).
The Inventories Index remained in expansion territory for the third month in a row. The reading of 53.4% is a 3.1 pp increase compared to the 50.3% reported in March. Of the total respondents in April, 47% indicated they do not have inventories or do not measure them. Comments from respondents include: “Purchased some products in advance of tariffs” and “Increased sales volumes show the need to increase inventory levels.” Respondents commented: ““Tariffs are negatively impacting small business customers. Many small business customers source their products from China. They cannot afford to compete in the marketplace sourcing from other countries. We could not move products fast enough to beat the tariff starting dates.” (Agriculture, Forestry, Fishing & Hunting
The Inventory Sentiment Index grew for the 24th consecutive month in April. The index registered 56.1%, a decrease of 0.5 pp from March’s figure of 56.6%. This reading indicates that respondents feel their inventories are too high when correlated to business requirements.
Read the ISM release.
