After a weaker than expected reading for the manufacturing sector earlier in the week, the ISM Non-Manufacturing report for the month of April rebounded and surpassed economist expectations. While consensus estimates called for the headline index to remain unchanged at 54.5, the actual reading came in quite a bit higher at 55.7, which was the best reading of the year. On a combined basis, and accounting for each sector’s overall share of the US economy, the ISM for April increased from 54.2 up to 55.1. That’s also the highest reading of the year.
The table below summarizes the m/m and y/y change for each of the ISM Non-Manufacturing report’s ten components. Breadth in this month’s report was mixed with a positive skew as five components showed m/m increases, four declined, and one was unchanged. The biggest increases on the month were Prices and New Orders while Export Orders saw the largest decline. Like the m/m figures, the y/y changes were also mixed with six increases and four declines. The biggest y/y increases were in Export Orders and Prices, while Employment and Backlog Orders saw the largest declines.
Of all ten components, the chart of Prices Paid is the most interesting. While it has been in a steady downtrend for several years now, this month’s increase (largest since September 2012) is taking the index right up to its recent downtrend line. Will this be just another failed test or the beginning of a breakout? Tune in next month.