The US services sector showed signs of improvement in April, with the Institute for Supply Management’s (ISM) services index rising to 51.6 per cent from 50.8 per cent in March.
The reading slightly exceeded market expectations of 50.2 per cent and remained above the 50 per cent threshold that indicates expansion.
The uptick came amid financial market volatility triggered by US President Donald Trump’s abrupt implementation of “liberation day” tariffs. Although the tariffs were paused for 90-days soon after for all countries except China, economic turmoil and uncertainties continue.
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Steve Miller, chair of the ISM services survey, said, “April’s change in indexes was a reversal of March’s direction,” noting rises in new orders, employment, and supplier deliveries indices. He observed, “Regarding tariffs, respondents cited actual pricing impacts as concerns, more so than uncertainty and future pressures.”
Despite continued mentions of federal agency budget cuts as a headwind, Miller said overall business sentiment is improving. “Respondents continue to mention federal agency budget cuts as a drag on business, but overall, results are improving,” he added.
Eleven services industries reported growth in April, including accommodation and food services, as well as arts and entertainment. Six industries, however, contracted, notably public administration, construction, and professional and technical services.
A key area of concern was inflationary pressure, with the prices index jumping 4.2 percentage points to 65.1 per cent- its highest level since January 2023.
