Investors were greeted with some positive economic data for a change this morning with a stronger than expected ISM Services report for the month of April. While economists were forecasting the headline index to decline down to 56.2 from last month’s reading of 56.5, it actually increased to 57.8. That was the biggest beat relative to expectations since the November report, which also happens to be the last time we saw a larger m/m increase. At current levels, the headline ISM Services report is just one point off its post-recession high reading of 58.8.
The second chart below shows the combined ISM reading accounting for the weights of Manufacturing and Services in the overall economy. With Services having a much larger weight than the Manufacturing sector, the combined index bounced 1.1 points to 57.0. That is also the highest reading since November’s report.
The table below breaks down this month’s ISM Services report by each of the index’s sub-components, and compares those readings to last month and last year. Although the headline index rose in April, the breadth of the report was mixed as five components rose versus March and five declined. Business Activity saw the biggest gain this month, rising from 57.5 up to 61.6, while Export Orders saw the largest decline falling from 59.0 down to 48.5. The 10.5 point decline for Export Orders was the largest one month decline since November 2008. Ahead of Friday’s job’s report, economists were focused on the Employment component of April’s report, which was slightly higher at 56.7 versus 56.6 in March. Finally, on the inflation front, Prices Paid declined from 52.4 down to 50.1.