Services Sector Growth Slows 1.3% in April

Services growth is shrinking, according to an Institute for Supply Management report released today. The Institute's Non-Manufacturing Index clocked in at 53.1% for April, down 1.3 percentage points from March and 0.9 points below analyst expectations.

An above-50 rating signals overall expansion, and the services sector has managed to increase its economic activity for 40 consecutive months. However, increasingly slow growth remains a worrisome sign for an overall economic recovery.

The index is comprised of 10 different components, from inventory sentiment to new orders. Each component remained above the 50% expansion mark, but messages were mixed across the board. The prices component fell 4.7 points to 51.2, while employment slowed to 52.0 after March 53.3 reading.

In a sign of positive future sentiment, the all-important new orders component fell 0.1 points but remained strong at 54.5. Inventories increased 4.5 points to 56.0, hinting that the sector may be expecting increased demand in the months ahead .

Of the 18 industries reflected in the index, 14 reported growth. Transportation and warehousing led the improvement, followed by retail trade and accommodation and food services. The four contracting industries were mining, education, health care and social assistance, and "other."


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