ISM Services Economy Shows Slowest Growth This Year

The Institute for Supply Management has released its data for April’s ISN non-Manufacturing sector and the reading is indicative of weaker and slowing growth.  The overall NMI came in at 53.5% versus 56.0 in March and under the consensus expectation of 56.0 from Bloomberg.  New orders and employment are both the weakest readings seen this year.

• Business Activity Index at 54.6%, down by 4.3 percentage points lower than the 58.9 percent reported in March.
• New Orders Index at 53.5%, a decrease of 5.3 percentage points.
• Employment Index at 54.2%, a decrease of 2.5 percentage points.
• The Prices Index decreased 10.3 percentage points to 53.6 percent, indicating prices increased at a significantly slower rate in April when compared to March.

This is the crux of the report and pretty much what you need to focus on: “Respondents’ comments affirm the slowing rate of growth. In addition, they remain concerned about rising fuel costs and the impact on shipping, transportation and petroleum-based product costs.”   The good news is that the ISM data in the services (non-manufacturing) economy is still above the 50.0% line showing growth over recessionary trends.  The bad news is that this is getting dangerously close to the red-line of contraction.

JON C. OGG