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ISM Services Survey Contraction in April Sparks Concerns: Prices Rise, Orders Fall

ISM Services Survey Contraction in April Sparks Concerns: Prices Rise, Orders Fall

ISM Services Survey Experiences a Dip in April - First Decrease Since 2022 Despite Rising Prices

Services Sector Shows Signs of Struggle Despite Improvement in 'Hard' Data

Following the less than satisfactory data from the Manufacturing survey, the Services sector also appears to be struggling, even though 'hard' data has shown some improvement.

S&P Global's Services PMI Hits a Five-Month Low

The Services PMI of S&P Global has dropped to a five-month low of 51.3. This is slightly better than the anticipated flash of 50.9, but it is still on a downward trajectory.

ISM Services PMI Also Takes a Hit

The ISM Services PMI didn't fare any better, plummeting to 49.4 from 51.4. This is the weakest it has been and the first contraction since December 2022.

Prices Paid Rebounds Strongly While New Orders and Employment Slow Down

Looking at the details, Prices Paid has seen a strong rebound, while New Orders and Employment have both slowed down.

Statement from S&P Global Market Intelligence's Chief Business Economist

Chris Williamson, the Chief Business Economist at S&P Global Market Intelligence, commented on the situation. He noted that the growth of the service sector slowed in April, indicating a sluggish start to the second quarter for the US economy. The weaker service sector performance, coupled with a similar cooling in manufacturing output growth, means that overall business activity in April grew at the slowest rate this year. He added that demand has weakened, as shown by the first drop in new orders for goods and services in six months. This is partly due to businesses and households adjusting to higher costs and the likelihood of prolonged higher interest rates. Business optimism has also cooled, dropping to its lowest level since November, leading companies to adopt a more cautious approach to staffing levels.

Summary: Prices Paid Increase, Orders Decrease, Optimism Cools

In summary, Prices Paid have gone up, Orders have gone down, and Optimism has cooled.

Final Thoughts

The ISM Services Survey's contraction in April, the first since 2022, raises important questions about the state of the US economy. With Prices Paid increasing and new orders decreasing, what does this mean for the future of the service sector? And how will businesses and households continue to adjust to the rising costs and the prospect of higher for longer interest rates? Share your thoughts and discuss this article with your friends. Don't forget to sign up for the Daily Briefing, which is delivered every day at 6pm.

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Some articles will contain credit or partial credit to other authors even if we do not repost the article and are only inspired by the original content.

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