US services activity softens in April, ISM says

3rd May 2024 14:13

(Sharecast News) - Services activity in the States shrank unexpectedly at the start of spring, marking the first contraction since December 2022.

The Institute for Supply Management's services sector Purchasing Managers' Index dipped from a reading of 51.4 for March to 49.4 in April.

Economists had forecast an improvement to 52.0.

A sub-index linked to levels of business activity dropped from 57.4 to 50.9, even as another tracking the prices paid by companies jumped to 53.4 to 59.2.

The sub-index linked to employment also fell, from 48.5 to 49.5.

On a more positive note, the key gauge for new orders only dipped from 54.4 to 52.2.

That for the backlog of orders meanwhile rose from 44.8 to 51.1.

Survey respondents' answers included mixed references to levels of activity, pressure on prices, shortages of certain goods such as storage containers and the difficulty of retaining employees in Retail.

Matthew Martin at Oxford Economics shrugged off the latest ISM numbers, telling clients: "Sticky inflation, higher subsequent interest rates, and geopolitical tensions are weighing on survey panelists, with increased business uncertainty leading to more negative responses.

"However, these risks should subside over the balance of the year and lead to more positive assessments of the business environment."