Home Logon FTA Investment Managers Blog Subscribe About Us Contact Us

Search by Ticker, Keyword or CUSIP       

Blog Home
   Brian Wesbury
Chief Economist
X •  LinkedIn
   Bob Stein
Deputy Chief Economist
X •  LinkedIn
  The ISM Non-Manufacturing Index Declined to 49.4 in April
Posted Under: Data Watch • Government • Inflation • ISM Non-Manufacturing • Fed Reserve • Interest Rates • COVID-19
Supporting Image for Blog Post


Implications:  The ISM Services index missed consensus expectations and fell into contraction territory for the first time in sixteen months.  Although the service sector has not matched the same weakness as the manufacturing sector (which has posted readings below 50 in seventeen of the last eighteen months), activity has been softening lately.  Looking at the details of the report, twelve major service industries reported growth in April while six reported contraction.  The drop in the overall index was a result of slower growth in business activity and new orders, with those indices declining to 50.9 and 52.2, respectively.  Survey comments noted tempered activity coming in part from slowing markets and soft business activity, and in part from concerns over inflation and geopolitical impacts on supply chains.  Hiring activity also looks to be cooling, as the index moved deeper into contraction territory in April, now below 50 for four out of the last five months.  Although labor tightness remains a key issue for hiring (and with short supply, labor costs have been reported higher for 41 consecutive months), only five major industries reported an increase in employment in April versus ten industries reporting a decline.  Inflation remains a major problem.  Prices continued to rise in the service sector and the pace accelerated in April.  Although the index, which currently sits at 59.2, is below the back-breaking pace from 2021-22, fourteen industries reported paying higher prices in April and not one reported paying lower prices.  What do we expect this year?  Continued weakening in services activity as the economic morphine from COVID wears off and the impact of the recent reductions in the M2 measure of the money supply make their way through the economy.  The service sector was a lifeline for growth in 2023.  Further deterioration in this sector could be a harbinger for tougher economic times ahead.  

Click here for a PDF version

Posted on Friday, May 3, 2024 @ 1:18 PM • Post Link Print this post Printer Friendly

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
Follow First Trust:  
First Trust Portfolios L.P.  Member SIPC and FINRA. (Form CRS)   •  First Trust Advisors L.P. (Form CRS)
Home |  Important Legal Information |  Privacy Policy |  California Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2024 All rights reserved.