Service Sector Activity Expands in April

Beating expectations and rising above the key 50 expansion level for the first time in three months, the ISM non-manufacturing index (NMI) came in at 52.0 in April. The subcomponents confirmed the headline strength as employment, business activity, new orders, and supplier deliveries expanded.

Service Activity Rises

• Surprising consensus expectations, the NMI recorded a 52.0 reading in April suggesting the economic slowdown may be moderating.
• The new orders index, however, was essentially flat and suggests any improvement going forward could be modest. Supplier deliveries jumped seven points to 56.0.

Prices Pressure Persists

• Prices paid for material and services continued to climb and will place considerable pressure on profit margins in 2008.
• The surprise in this report was the employment index which rebounded to 50.8 after registering three months below 50. We still expect to see payrolls declines in coming months but the depth of decline may not be as bad as once feared.

Wachovia Corporation
http://www.wachovia.com

Disclaimer: The information and opinions herein are for general information use only. Wachovia Corporation and its affiliates, including Wachovia Bank, N.A., do not guarantee their accuracy or completeness, nor does Wachovia Corporation or any of its affiliates, including Wachovia Bank, N.A., assume any liability for any loss that may result from the reliance by any person upon any such information or opinions. Such information and opinions are subject to change without notice, are for general information only and are not intended as an offer or solicitation with respect to the purchase or sales of any security or any foreign exchange transaction, or as personalized investment advice. Securities and foreign exchange transactions are not FDIC-insured, are not bank-guaranteed, and may lose value.