News #60 - April Services PMI contracts after 15 months bongdaso growth, reports ISM

A 15-month stretch bongdaso growth in the services economy came to an end in April, according to the new edition bongdaso the Services ISM Report on Business, which was issued today by the Institute for Supply Management (ISM).

The Services PMI, at 49.4 (a reading bongdaso 50 or higher signals growth) fell 2.0%. The last time the index contracted was in December 2022, when it came in at 49 and prior to that the last month seeing contraction was in May 2020, when it came in at 45.4.

The April Services PMI reading is 2.8% below the 12-month average bongdaso 52.2, with August 2023’s 54.1 marking the high for that period and last month’s 49.4 reading marking the low for that period.

ISM reported that 12 services sectors it tracks saw gains in April, including: Accommodation & Food Services; Construction; Agriculture, Forestry, Fishing & Hunting; Utilities; Mining; Management bongdaso Companies & Support Services; Educational Services; Retail Trade; Finance & Insurance; Health Care & Social Assistance; Public Administration; and Wholesale Trade. The six sectors posting declines included: Other Services; Information; Arts, Entertainment & Recreation; Real Estate, Rental & Leasing; Professional, Scientific & Technical Services; and Transportation & Warehousing.

bongdaso report’s equally weighted subindexes that directly factor into bongdaso NMI were mixed from March to April, including:

• Business Activity/Production, at 50.9, down 6.5%, growing, at a slower rate, for bongdaso 47th consecutive month, with 12 services sectors reporting growth;
• New Orders, at 52.2, down 2.2%, growing, at a slower rate, for bongdaso 16th consecutive month, since contracting in December 2022, with 12 sectors reporting growth;
• Employment, at 45.9, decreased 2.6%, contracting, at a faster rate, for bongdaso third consecutive month, with five sectors reporting growth;
• Backlog bongdaso orders, at 51.1, increased 6.3%, growing after contracting in March, with nine sectors reporting growth;
• Supplier Deliveries, at 48.5, (a reading above 50 indicates slower deliveries), were up 3.1% from March, growing faster, at a slower rate, for bongdaso third consecutive month, with five sectors reporting slower deliveries;
• Prices, at 59.2, increased 5.8%, increasing, at a faster rate, for bongdaso 83rd consecutive month, with 14 sectors reporting higher prices; and
• Inventories, at 53.7, up 8.1%, growing after four months bongdaso contraction, with six sectors reporting higher inventories

Comments from ISM member panelists included in bongdaso report highlighted various issues being seen in bongdaso services sector.

A Retail Trade panelist noted that steady demand has been favorable during this traditionally slower season.

“Pricing is stable and bongdaso supply chain is strong,” said bongdaso panelist. “Employee recruitment and retention has been a challenge in some areas; however, bongdaso situation isn’t critical.”

And a wholesale trade panelist observed that bongdaso overall market has definitely slowed down, adding that business is up year over year and month over month, with growth coming from new customers as well as taking market share from its competitors.

Tony Nieves, Chair bongdaso the ISM’s Services Business Survey Committee, said in an interview, while April contracted, it does not represent a trend in any way, given the extended growth track the Services PMI had been on.

“We were in the same situation in December 2022, and we though the Services PMI might be in that tranche for a month or two,” he said. “But it bounced right back. The reading is just under the 50-baseline. Employment, I think, will pick up. Our panelists have said that the second half bongdaso the year will be better than the first half.”

Looking at the ongoing gains in prices, Nieves said inflation remains a big concern for the services sectors. As for gains in inventories, he noted it is reflection bongdaso a demand-pull environment.

“So, if bongdaso demand has waned a bit and we had a little backlog on bongdaso inventories, that's why it grew month-over-month,” he said. “We have improved capacity and improved logistics, and bongdaso supply chain has improved overall. It's just that demand has waned, so that's what's impacting everything else.”

As for the state bongdaso the services sector just more than four months into 2024, Nieves said that ISM panelists expected things to be flat over the first half bongdaso the year, with things currently a little bit ahead bongdaso that pace.

“April is bongdaso pullback to level off to what was projected in bongdaso first place,” he said. “They said bongdaso second half would be better, and panelists’ comments indicate they are going to start hiring this spring so let’s see what happens.”

Source:https://www.logisticsmgmt.com/article/april_services_pmi_contracts_after_15_months_of_growth_reports_ism

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