The nation’s service industry continued to lose momentum in April, marking the second month in a row of declining growth as businesses faced sharply reduced new orders and mounting cost pressures, according to a new industry report released Tuesday.
Data from the Institute for Supply Management revealed that its nonmanufacturing purchasing managers index fell to 53.6 in April, down from 54.0 the previous month. While economists had predicted a reading of 53.7, any figure above 50 still signals growth in the services industry, which represents more than two-thirds of the nation’s economic output.
Though the survey showed business activity improved by 2 points to reach 55.9, other key indicators painted a more concerning picture.
New orders experienced a dramatic decline, dropping to 53.5 from March’s three-year peak of 60.6. The 7.1-point decrease represents the steepest fall since March 2023. Meanwhile, businesses continue to grapple with elevated costs, as the prices paid index remained steady at 70.7, matching levels not seen since October 2022 during the early stages of post-pandemic inflation recovery.
The ongoing conflict with Iran has intensified financial pressures on businesses through multiple channels. Energy costs have surged, with motor vehicle fuel prices reaching their highest point since summer 2022 according to AAA data. Additionally, supply chain complications have extended delivery schedules for essential business materials. The ISM supplier delivery index climbed to 56.8, its highest reading since July 2022, up from 56.2 in March.
The employment picture remained troubling, with the jobs index staying below the 50-point threshold for the second consecutive month. April’s reading of 48.0 showed improvement from March’s 45.2, but still indicates contraction in service sector hiring.
