Economic activity in the services sector expanded in April, although retail slipped during the month, according to the Institute of Supply Management Services Purchasing Managers Index report.
Economic activity in the manufacturing sector also expanded in April for the fourth consecutive month, ISM reported.
The ISM Services PMI registered 53.6% in April, its 22nd consecutive month in expansion territory. Based on a poll of service sector purchasing and supply executives in the United States, the index remained above the dividing line of 50 separating expansion from contraction.
Steve Miller, chair of the ISM Services Business Survey Committee, said the April PMI reading was down 0.4 percentage point from 54% in March.
In commenting on the main index components, Miller said: “The Business Activity Index remained in expansion territory in April, increasing two percentage points to 55.9% from March’s reading of 53.9%. The New Orders Index registered 53.5%, 7.1 percentage points below March’s figure of 60.6% and 0.4 percentage point below its 12-month average reading of 53.9%. The Employment Index contracted for the second month in a row with a reading of 48%, a 2.8-percentage point increase from the 45.2% recorded in March. The Supplier Deliveries Index registered 56.8%, 0.6 percentage point higher than the 56.2% recorded in March. This is the 17th consecutive month that the index has been in expansion territory, indicating slower supplier delivery performance.”
Supplier Deliveries is the only ISM PMI Report index that is inversed, as a reading above 50% indicates slower deliveries, which is typical as the economy improves and customer demand increases.
“The Prices Index held steady at 70.7% in April, the same as March’s figure and repeating its highest reading since October 2022, 70.7%,” Miller stated. “The index has exceeded 60% for 17 straight months, increasing its 12-month average from 67.2% to 67.7%. Diesel, gasoline, oil and related price increases were the most frequently mentioned commodities up in price in April. The Inventories Index registered 53.1%, down 1.7 percentage points from March’s figure of 54.8%, and its second straight month-over-month decrease. The Inventory Sentiment Index expanded for the 36th consecutive month, registering 55.1%, up 0.8 percentage point from March’s figure of 54.3%, 0.6 point below its 12-month average. The Backlog of Orders Index remained in expansion territory for a third straight month for the first time since February 2023, registering 53% in April, a 0.6-percentage point decrease from the March figure of 53.6%. The New Export Orders and Imports indexes both remained in expansion territory for the third month in a row. The New Export Orders Index increased to 52.1%, 1.4 percentage points above its March reading of 50.7%, and the Imports Index registered 54.7%, a decrease of 0.5 percentage point compared to its March reading of 55.2%.”
April’s Services PMI reading of 53.6% is 1.1 percentage points above the 12-month average of 52.5%, representing an uptick of 0.2 percentage point over March’s 12-month average of 52.3%, Miller noted.
“April’s Services PMI features the fourth month in a row with an increase in the 12-month PMI average, up 0.8 percentage point from 51.7% in December 2025 to its current 52.5%,” Miller added. “The Prices Index was flat but remained above 70% amid sustained higher oil and fuel costs. The Supplier Deliveries Index indicated slower performance compared to March, coming in at 3.9 percentage points above its 12-month average. Increases in the Business Activity, Supplier Deliveries and Employment indexes were more than offset by a 7.1 percentage point drop in the New Orders Index. Ongoing commentary that increased ordering is related to getting ahead of future price increases seems to have been more applicable to March than April. However, the Backlog of Orders Index remained in expansion territory, well above its 12-month average of 46.4%. Exports and imports activity remains strong and have expanded for three months in a row for the first time since a four-month run from July through October 2024. For the second month in a row, there are no commodities in the report listed as down in price, with aluminum, copper, lumber, petroleum products and software licensing continuing multimonth runs of being up in price. There were several comments from respondents stating that they have yet to see petroleum price increases impacting petroleum-related products, so we expect to see continued elevated readings for the Prices Index for several months, regardless of when the conflict in Iran ends, due to these costs working their ways through global supply chains.”
The services industries reporting growth in April were: Other Services; Wholesale Trade; Management of Companies & Support Services; Mining; Information; Construction; Accommodation & Food Services; Professional, Scientific & Technical Services; Utilities; Finance & Insurance; Transportation & Warehousing; Educational Services; Health Care & Social Assistance, and Public Administration. The industries reporting a contraction in the month of April were: Agriculture, Forestry, Fishing & Hunting; Real Estate, Rental & Leasing, and Retail Trade.
The Manufacturing PMI came in at 52.7% in April, the same as in March, ISM maintained. The reading indicates that the overall U.S. economy continued in expansion for the 18th straight month.
The manufacturing industries reporting growth in April were: Textile Mills; Nonmetallic Mineral Products; Primary Metals; Plastics & Rubber Products; Miscellaneous Manufacturing; Transportation Equipment; Machinery; Electrical Equipment, Appliances & Components; Paper Products; Fabricated Metal Products; Computer & Electronic Products; Chemical Products, and Furniture & Related Products. The industries reporting contraction in April were: Wood Products; Petroleum & Coal Products, and Food, Beverage & Tobacco Products.
