Service Sector

The US service sector accelerated in April, rising at the fastest pace in eight months as new orders jumped and overall activity quickened by the most since 2008.

The Institute for Supply Management (ISM) reported that its service index rose to 55.2, up from 53.1 in March. This was ahead of analyst expectations of 54.1. This marks the 52nd consecutive month of growth. A reading above 50 indicates the sector is expanding.

The New Orders Index rose to 58.2, up from 53.4 in March. That marked the largest monthly increase since March 2010. The Business Activity Index surged to 60.9 from 53.4 in March. The 7.5 point jump was the measure's largest monthly increase since February 2008.

The employment index fell to 51.3, down from 53.6 in March. This conflicted with government data which showed service-sector hiring expanded last month by the most in 11 months.

The majority of survey respondents' comments indicate that both business conditions and the economy are improving.”

The Institute of Supply Management reported that 14 of the 18 non-manufacturing industries reported growth in April — listed in order — are: Arts, Entertainment & Recreation; Wholesale Trade; Agriculture, Forestry, Fishing & Hunting; Retail Trade; Construction; Public Administration; Accommodation & Food Services; Educational Services; Transportation & Warehousing; Finance & Insurance; Management of Companies & Support Services; Information; Real Estate, Rental & Leasing; and Utilities.

Respondents of the survey said

  • “Our outlook for 2014 remains on target. No significant changes with our customer base.” (Management of Companies & Support Services)
  • “General business conditions are improving.” (Information)
  • “Market conditions are generally steady; internal pressure to reduce overall cost of goods and services.” (Finance & Insurance)
  • “Business levels have been stable. Our company made an acquisition this past month, so we are planning for revenue growth in the second half of 2014.” (Real Estate, Rental & Leasing)
  • “Traffic and sales are up due to break in weather.” (Accommodation & Food Services)
  • “Overall spending continues to trend upward, particularly for large dollar items, like vehicles and aircraft, as the state replenishes the fleet that was depleted during 2009—2013.” (Public Administration)
  • “We are experiencing a pickup in sales, which has brought back a little optimism that we may have seen the floor, and things could be turning up. We are making investments to take advantage of the upswing to leverage as many sales options as possible.” (Retail Trade)


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