US ISM Services PMI edged down from 54.0 to 53.6 in April, slightly missing expectations of 53.8 but still remaining above the 12-month average of 52.5, indicating continued expansion in the sector. Fourteen industries reported growth, one more than in March, while the number of industries in contraction held steady at three, pointing to a broadly resilient services economy.
Details of the report were mixed but generally supportive. Business activity rose from 53.9 to 55.9, signaling stronger output, while the employment index improved from 45.2 to 48.0, though it remains in contraction territory. The data suggest that while hiring is stabilizing, momentum in services output remains intact.
Inflation pressures remain a key concern. The prices index held at 70.7, its highest level since October 2022, and has stayed above 60 for 17 consecutive months. ISM noted that rising costs for materials such as aluminum, copper, lumber, and petroleum products continue to filter through supply chains, with further upward pressure expected in coming months.
Historically, a PMI reading at this level is consistent with around 1.7% annualized GDP growth.
| Indicator | Previous | Latest | Notes |
|---|---|---|---|
| PMI Services | 54.0 | 53.6 | Slight dip, still expanding |
| Business Activity | 53.9 | 55.9 | Stronger output |
| Employment | 45.2 | 48.0 | Improving but still <50 |
| Prices Index | 70.7 | 70.7 | Highest since Oct 2022 |
