U.S. April ISM Services - Weakness may be overstated
April’s ISM services index of 49.4 from 51.4 has fallen below neutral for the first time since December 2022. That dip was explained by bad weather. There is no obvious erratic factor here to explain the weakness, but the details suggests that weakness may be overstated.
New orders at 52.2 from 54.4 showed a modest slowing but remain positive, and may better illustrate the underlying picture that the headline.
Business activity, which has outperformed new orders in most recent months, slowed sharply to a barely positive 50.9 from 57.4 and employment is very weak at 45.9 from 48.5. The payroll, while slower, is not as weak as this index implies.
The fourth and final component of the composite, delivery times, corrected higher to 48.5 from March’s very weak 45.4.
Prices paid do not contribute to the composite and increased to 59.2 from 53.4, returning to what had been a stable picture after a surprisingly weak 53.4 in March. Surprising weakness in other indices in April may also prove temporary..
