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 Slowed to 57.1 in April
Posted Under: Data Watch • Employment • Inflation • ISM Non-Manufacturing
Supporting Image for Blog Post

Implications:  The service sector continued to expand rapidly in April, albeit at a slightly slower pace than March, as inflation, supply-chain issues, and labor shortages continue to prevent activity from expanding even more quickly.  Overall gains were broad-based, with seventeen of eighteen industries reporting growth.  Business activity and new orders – the two most forward-looking indices – were mixed in April, but both stand comfortably above 50, signaling growth.  Survey comments highlighted inflation, supply-chain issues, and difficulty finding qualified workers as problems their businesses face when trying to meet the explosion of demand since our economy began re-opening.  These concerns were reflected in several of the major category indices.  First, the prices paid index rose to 84.6 in April, an all-time high for the category dating back to 1997.  In total, 39 commodities were reported up in price for the month of April while only one (fuel) reported down.  Second, the supplier deliveries index moved higher in April and remains at a historically elevated 65.1, signaling longer lead times for businesses.  Third, the employment index fell back into contraction territory, as the service sector struggles to find qualified workers.  Labor shortages have been widespread through the US economy, as the Job Openings and Labor Turnover Survey (JOLTS) recently reported 11.5 million US job openings in the month of March, a new record high.  Despite these persistent headwinds, the service sector remains well in expansion territory, and there are reasons for optimism.  Though still historically elevated, the index for order backlogs declined in April and remains below the high set in late 2021.  Meanwhile, the inventories index expanded for the third straight month, suggesting businesses are starting to finally re-stock their shelves.  Keep in mind that pre-pandemic, services made up roughly 69% of consumption spending. That number fell to 64% during the depths of the pandemic as people stopped going to concerts, movies, restaurants, etc.  Expect to see continued growth in the service sector in the months ahead as spending continues to shift back to the pre-pandemic status quo.

Click here for a PDF version
Posted on Wednesday, May 4, 2022 @ 1:28 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.