Well, it looks like the regional Fed surveys might not have been that far off after all. Today’s ISM Services report was much weaker than expected at 53.5 versus expectations of 56. This is still a fairly positive report, but not nearly as positive as the Manufacturing report earlier in the week. The good news is we’re still clearly expanding. The bad news is there’s broad deterioration in parts of this report. Most notable were declines in new orders and employment. ISM has more details:
Economic activity in the non-manufacturing sector grew in April for the 28th consecutive month, say the nation’s purchasing and supply executives in the latest Non-Manufacturing ISM Report On Business®.
The report was issued today by Anthony Nieves, C.P.M., CFPM, chair of the Institute for Supply Management™ Non-Manufacturing Business Survey Committee. “The NMI registered 53.5 percent in April, 2.5 percentage points lower than the 56 percent registered in March. This indicates continued growth this month, but at a slower rate in the non-manufacturing sector. The Non-Manufacturing Business Activity Index registered 54.6 percent, which is 4.3 percentage points lower than the 58.9 percent reported in March, reflecting growth for the 33rd consecutive month. The New Orders Index decreased by 5.3 percentage points to 53.5 percent, and the Employment Index decreased by 2.5 percentage points to 54.2 percent, indicating continued growth in employment at a slower rate. 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. According to the NMI, 15 non-manufacturing industries reported growth in April. 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 15 non-manufacturing industries reporting growth in April — listed in order — are: Retail Trade; Information; Construction; Management of Companies & Support Services; Arts, Entertainment & Recreation; Educational Services; Finance & Insurance; Accommodation & Food Services; Wholesale Trade; Real Estate, Rental & Leasing; Transportation & Warehousing; Other Services; Public Administration; Professional, Scientific & Technical Services; and Health Care & Social Assistance. The three industries reporting contraction in April are: Agriculture, Forestry, Fishing & Hunting; Utilities; and Mining.
WHAT RESPONDENTS ARE SAYING …
- “Sales have improved slightly, yet still lag behind pre-recession highs. The hiring freeze has been lifted, but open positions are still being vetted for need, timing of the fill, and so forth.” (Public Administration)
- “Business conditions have improved in March and April 2012. We have received more job inquiries and job awards in this period. The increase is about 15 percent.” (Professional, Scientific & Technical Services)
- “Current conditions compared to prior year are good. Fuel and food continue to be a challenge.” (Arts, Entertainment & Recreation)
- “Business is slowing — and projections for the rest of the year are being lowered.” (Professional, Scientific & Technical Services)
- “Business is still ahead of last year, but has leveled off a little.” (Wholesale Trade)
- “High price of petroleum/oil driving up costs for all market areas.” (Transportation & Warehousing)