Economic activity in the services sector contracted in April for the first time since December 2022, ending a period of 15 consecutive months of growth.
The April ISM Services Report on Business show Services and Manufacturing are both in contraction.
Economic activity in the services sector contracted in April for the first time since December 2022, ending a period of 15 consecutive months of growth, say the nation’s purchasing and supply executives in the latest Services ISM® Report On Business®. The Services PMI® registered 49.4 percent; it indicated sector expansion in 45 of the previous 47 months.
The report was issued today by Anthony Nieves, CPSM, C.P.M., A.P.P., CFPM, Chair of the Institute for Supply Management® Services Business Survey Committee
A Services PMI® above 49 percent, over time, generally indicates an expansion of the overall economy. Therefore, the April Services PMI® indicates the overall economy is growing for the 16th consecutive month. Nieves says, “The past relationship between the Services PMI® and the overall economy indicates that the Services PMI® for April (49.4 percent) corresponds to a 0.2-percent increase in real gross domestic product (GDP) on an annualized basis.”
“The decline in the composite index in April is a result of lower business activity, slower new orders growth, faster supplier deliveries and the continued contraction in employment. Survey respondents indicated that overall business is generally slowing, with rates varying by company and industry. Employment challenges continue to be primarily due to difficulties in backfilling positions and/or controlling labor expenses. The majority of respondents indicate that inflation and geopolitical issues remain concerns.”
Employment
The five industries reporting an increase in employment in April are: Accommodation & Food Services; Management of Companies & Support Services; Construction; Mining; and Utilities. The 10 industries reporting a decrease in employment in April — listed in order — are: Other Services; Real Estate, Rental & Leasing; Information; Finance & Insurance; Wholesale Trade; Retail Trade; Public Administration; Transportation & Warehousing; Health Care & Social Assistance; and Professional, Scientific & Technical Services.
Prices
Prices paid by services organizations for materials and services increased in April for the 83rd consecutive month. The Prices Index registered 59.2 percent, 5.8 percentage points higher than the 53.4 percent registered in March. The April reading is the 22nd in a row near or below 70 percent (including 12 of the last 13 months at or below 60 percent), following 10 straight months of readings near or above 80 percent from September 2021 to June 2022.
Fourteen services industries reported an increase in prices paid during the month of April, in the following order: Construction; Management of Companies & Support Services; Public Administration; Other Services; Retail Trade; Accommodation & Food Services; Educational Services; Finance & Insurance; Real Estate, Rental & Leasing; Wholesale Trade; Information; Utilities; Health Care & Social Assistance; and Professional, Scientific & Technical Services. No industry reported a decrease in prices for the month of April.
The above line caught my attention. “No industry reported a decrease in prices for the month of April.”
And prices paid by service organizations have been increasing for 83 consecutive months.
I would be interested in prices received by service organizations but ISM does not capture that data.
Manufacturing ISM Moves Back Into Contraction
On May 1, I noted Manufacturing ISM Moves Back Into Contraction, New Orders Decline
The ISM manufacturing index is back in contraction after a one month reprieve, but prices expand sharply. It’s a bad mix.
Jobs Up a Less Than Expected 175,000 in April
On Friday, I noted Jobs Up a Less Than Expected 175,000 in April
The stock and bond markets are salivating today[Friday] because nonfarm payrolls are only up 175,000 vs a Bloomberg Econoday expectation of 243,000.
Is anyone watching prices?
OK, Average Hourly Earnings of All Nonfarm Workers rose $0.07 to $34.75. A year ago the average wage was $33.44. That’s a gain of 3.9%. So we have a slowdown in year-over-year wage growth.
But let’s see what happens next month when California raises minimum wages to $20 per hour for fast food workers.
Understatement of the Day: The Fed Notes “Lack of Progress” on Inflation
On May 1, I commented on the Understatement of the Day: The Fed Notes “Lack of Progress” on Inflation
But on Friday, all such concerns vanished. Let’s see.
This is happening the world over…. this will destroy discretionary spending and collapse the economy link to nzherald.co.nz
No solution cuz inflation is only going to get worse… till it causes a deflationary implosion
We know that China has multiple problems with growth in manufacturing and housing.
They are retracting , The housing industry is in chaos. Banks are in trouble. They will not be bailed out by the government. Supply chain issues still exist. At home manufacturing has been in a decline for 16 months now. CPI and PPI have been slowly rising again. The stimulus money is gone. Consumers are tapped out. What is next is a raise in home equity loans to cover their debt. The FED did their job of price stability which is stopping pay increases foe workers. Transfer of wealth to the few from the many. Jobs are all part time . Corporations are making hugh profits. GDP is levitated by inflation and increase in government jobs, lest not forget foreign workers increasing in jobs as well
The media are made up of lazy, biased kids with no memory of stagflation in the 1970s and the amount of time it took (a decade) after Volcker’s shock therapy of 1980 to 1982 to really wring inflation out of the system. What surprises me is that the financial markets have been so wrong on interest rate forecasts, and so bullish on inflation.
We’re approaching juncture recognition. That’s why Powell slowed the taper in June. Powell doesn’t want the economy to slow because it would mean lower tax receipts and higher deficit spending.
services data/conditions always lag behind tangibles/production.
and now that services have caught-up to tangibles, it will be 2x more difficult for fedguv stats manipulation to hide the accumulated ‘bad news’. i think this is what Mish is implying at the end of this post.
Learn to cut your own hair. Change the oil in your car yourself. Cut up a whole chicken. Fry a hamburger and French fries. Iron your clothes. Mow the lawn. Make coffee. Walk your dog. Download a movie. Pump your own gas. Wash your car. Drive don’t fly. Buy a pipe wrench.
Yup. You got the right idea. I can see you are very new at this, but you’ll figure it all out. It’s actually much easier to do for one’s self as you learn more. I don’t buy squat.
I agreed with you, Steve, until about a year ago when I suddenly realized that I hated Draining the Oil from my Diesel (Cummins) pusher rig. For one thing, I do not crawl as easily as I did in my 20’s to late 60’s. At 70 plus, I am not that spry.
I AM doing push-ups and some core work, but my knees are shot from Motorcycle Accidents and being a wrestler into College (I won Nationals and State). That has done me in. So, I now pay for it to be done.
Guess what: the Speedco Oil Change shop over-filled my Cummins by a Gallon! I pulled the dip stick. SCREW meth addict as the guy who did the work was a physical and mental Mess.
They refunded part of the charges and it was STILL $400 for just the freaking oil.
That is brainless work and even then the “mechanic was a screw-up.”
I then asked them: did HE TORQUE the drain bolt? “NOT SURE, SIR. Do you want me to check it.”
“HELL YES!!!!!!!!!!” THAT is why I did it myself. This new Generation of people simply DO NOT CARE A BIT.
I’m amazed at the number of people that still have their groceries picked by employees and delivered to their car. There are a lot of people that don’t want to do anything themselves. This breeds laziness,
This will also get folks off the couch and allow them some exercise.
Will be better for people’s health. Will also allow folks to cancel their gym memberships that they do not use!
My favorite is never marry a housewife. Make sure she works and pays her own bills. That’s non-negotiable!
Ah, yes, the typical purely libertarian view: “Pull yourself up by your bootstraps… The system isn’t crushing you; it’s your poor decisions!”
“Every man is an island, and no one affects your destiny but you!”
Critical theorists everywhere cry out.