 | The ISM non-manufacturing composite index fell to 53.5 in April |
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| Posted Under: Data Watch • ISM Non-Manufacturing |
Implications: Unlike the manufacturing sector, which showed acceleration in April, the service sector continued to grow in April, but not as quickly as it had been for the first three months of the year. While still above 50 for the 28th straight month – signaling growth – the ISM services index came in lower than the consensus expected in April. The business activity index, which has an even stronger correlation with real GDP growth than the overall index, also fell in April, but remains at a solid 54.6. The employment index followed the same pattern, dropping, but to a level still above 50. On the inflation front, the prices paid index fell to 53.6. This is consistent with other indicators showing a temporary moderation in inflation. However, given the loose stance of monetary policy, we don't expect this lull to last. In other recent news, the ADP employment index, which measures private sector payrolls, increased 119,000 in April. New claims for unemployment insurance fell 27,000 last week to 365,000, while continuing claims for regular state benefits dropped 53,000 to 3.28 million. Plugging all these figures into our employment models suggests tomorrow's official Labor Department report will show a 155,000 gain in private payrolls (145,000 nonfarm) and a jobless rate of 8.1%.
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