US Non-Manufacturing ISM narrowed in April 2011


In April 2011, the ISM index for US services collapsed. The level stays in economy-expanding territory but the downward trend clearly underlines that there is something wrong going on.

US Non-Manufacturing ISM narrowed in April 2011
In April 2011, the Non-Manufacturing ISM index dropped dy 4.5 points, to 52.8 points, after a previous drop of 2.4 points in March. It is the sharpest decline recorded since November 2008. The main survey for US services remained above 50 points (under 50 pts: activity contracts; above 50 points; activity expands) but the fall is clearly not a good news.

All main sub-components are down (new orders, exports orders, production and employment). New orders have collapsed in April, down by 11.2 points to 52.7 points. This is the most important fall ever recorded for Non-Manufacturing ISM (including the end of 2008). The employment index is down and back to its lowest level since September 2010.

The only indicator that stood still in April was the index for price, still close to its historical highs (70.1 points).

Economic Impacts
The activity in services is down sharply and the short term outlook is also deteriorating, including for hiring intentions. This indicator is the gloomiest seen for the US economy since lest summer.

The Price Index is pointing toward strong cost pressures (as in industry, cf. April 2011 Manufacturing ISM).

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