Well, that’s convenient.
The marquee gauge of business activity across the biggest part of the world’s largest economy printed exactly in line with consensus on Tuesday.
At 53.6, ISM services was bang on the collective guesstimate of the several dozen people who get paid multiples of a nurse’s salary to be wrong about economic aggregates. Today was those folk’s lucky day. Economists, I mean. Not nurses. They don’t have lucky days.
Technically, the headline print on the first of this week’s top-tier macro releases from the US was the “worst” since November, but 53.6 still counts as respectable.
As the figure shows, April marked the fourth straight month during which both ISM headlines printed in expansion territory simultaneously.
The subindexes painted a mixed picture. Although the production gauge picked up near 56, new orders slipped more than seven points (that’s a lot) from north of 60 in March to a more pedestrian 53.5 in April.
Among the anecdotes, a comment from a panelist in Construction stood out. “Spring selling season is here, but interest rates, inflation and oil supply issues are keeping buyers on the fence,” the respondent said. The main driver of sales are “discounts and rate buy-downs.” That’s margin pressure.
The prices gauge in the release loitered above 70, but unlike its factory-side counterpart, the services index didn’t accelerate further from March’s multi-year high.
Thankfully, the employment index rebounded from the prior month’s slump, but at 48, it remains in contraction.
“The [price] index has exceeded 60 for 17 straight months,” ISM’s Steve Miller remarked, noting that the gauge’s 12-month average is pushing 68. “Diesel, gasoline, oil and related price increases were the most frequently mentioned commodities up in price in April,” he added.
The same panelist in Construction warned the war’s jeopardizing efforts to bring down home-building costs. “Value-engineering ha[s] reduced costs to pre-pandemic levels, but inflation and rising oil prices threaten that hard work,” the respondent said. “Fuel surcharges, previously whispers, have become requests.”
