Implications: Service sector activity picked up in April at the fastest pace of 2016. Among the eighteen industries that the ISM surveys, thirteen reported growth in April, while just four - including mining and transportation - reported contraction. Service sector activity has now grown for 75 consecutive months, and continued strength in both new orders and business activity show positive signs for the months ahead. The new orders index, a signal of how business activity and employment are likely to move in coming months to fill demand, rose to 59.9, the highest reading in six months. Meanwhile the business activity index declined one point to a still robust 58.8. Taken together, growth prospects remain positive with no sign of a recession. On the inflation front, the prices paid index broke above 50 in April, coming in at 53.4 as rising prices for metals and fuels more than offset declining prices for beef, eggs, and natural gas. The employment index ticked higher in April, rising to 53.0 from 50.3 in March. In both 2014 and 2015, the pace of service sector growth slowed (but still showed growth) in the first quarter before picking up through the remainder of the year, and today's report suggests this trend may continue in 2016. In other news this morning, the ADP index, which measures private-sector payrolls, increased 156,000 in April. We are waiting on tomorrow's initial claims data for a final estimate, but plugging the ADP figures into our models suggests Friday's official report on nonfarm payrolls will show a gain north of 200,000, another solid month. In other recent news, consumers continue to flock to auto dealerships, with cars and light trucks selling at a 17.4 million annual rate in April, up 5.1% from March and up 4.0% from a year ago.
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