by Calculated Risk on 5/03/2023 10:05:00 AM

(Posted with permission). The ISM® Services index was at 51.9%, up from 51.2% last month. The employment index decreased to 50.8%, from 51.3%. Note: Above 50 indicates expansion, below 50 in contraction.

From the Institute for Supply Management: Services PMI® at 51.9% April 2023 Services ISM® Report On Business®

Economic activity in the services sector expanded in April for the fourth consecutive month as the Services PMI® registered 51.9 percent, say the nation’s purchasing and supply executives in the latest Services ISM® Report On Business®. The sector has grown in 34 of the last 35 months, with the lone contraction in December.

The report was issued today by Anthony Nieves, CPSM, C.P.M., A.P.P., CFPM, Chair of the Institute for Supply Management® (ISM®) Services Business Survey Committee: “In April, the Services PMI® registered 51.9 percent, 0.7 percentage point higher than March’s reading of 51.2 percent. The composite index indicated growth in April for the fourth consecutive month after a reading of 49.2 percent in December, the first contraction since May 2020 (45.4 percent). The Business Activity Index registered 52 percent, a 3.4-percentage point decrease compared to the reading of 55.4 percent in March. The New Orders Index expanded in April for the fourth consecutive month after contracting in December for the first time since May 2020; the figure of 56.1 percent is 3.9 percentage points higher than the March reading of 52.2 percent.

“The Supplier Deliveries registered 48.6 percent, 2.8 percentage points higher than the 45.8 percent recorded in March. Looking back beyond the past few months, this month the index has reflected the fastest supplier delivery performance since December 2015, when it registered 48.5 percent. (Supplier Deliveries is the only ISM® Report On Business® index that is inversed; a reading of above 50 percent indicates slower deliveries, which is typical as the economy improves and customer demand increases.)

“The Prices Index was up 0.1 percentage point in April, to 59.6 percent. The Inventories Index contracted in April after two consecutive months of growth preceded by eight straight months of contraction; the reading of 47.2 percent is down 5.6 percentage points from March’s figure of 52.8 percent. The Inventory Sentiment Index (48.9 percent, down 9 percentage points from March’s reading of 57.9 percent) contracted after four consecutive months of growth preceded by a four-month period of contraction.

“Fourteen industries reported growth in April. The Services PMI®, by being above 50 percent for a fourth month after a single month of contraction and a prior 30-month period of expansion, continues to indicate sustained growth for the sector. The composite index has indicated expansion for all but three of the previous 159 months.”

Nieves continues, “There has been a slight uptick in the rate of growth for the services sector, due mostly to the increase in new orders and ongoing improvements in both capacity and supply logistics. The majority of respondents are mostly positive about business conditions; however, some respondents are wary of potential headwinds associated with inflation and an economic slowdown.”
emphasis added

The PMI was slightly above expectations.