Economic activity in the services sector continued to expand in April, according to the latest ISM Services PMI Report. The Services PMI registered 53.6%, the 22nd consecutive month in expansion territory.
The report was issued by Steve Miller, chair of the Institute for Supply Management (ISM) services business survey committee: “In April, the Services PMI registered 53.6 %, a decrease of 0.4 percentage point compared to March’s figure of 54 %. The Business Activity Index remained in expansion territory in April, increasing 2 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.”
Miller said, “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 Reports index that is inversed; a reading of 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 %). 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.”
Miller continued, “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 %. Fourteen industries reported growth in April, one more than in March, and the number reporting contraction remained at three. The April Services PMI reading of 53.6 % is 1.1 percentage points above the 12-month average of 52.5 %. That average is an uptick of 0.2 percentage point over March’s 12-month average of 52.3 %.”
Miller added, “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 %. 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 %.”
Miller concluded, “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 14 services industries reporting growth in April — listed in order — are: other services; wholesale trade; management of companies and support services; mining; information; construction; accommodation and food services; professional, scientific and technical services; utilities; finance and insurance; transportation and warehousing; educational services; health care and social assistance; and public administration.
The three industries reporting a contraction in the month of April are: agriculture, forestry, fishing and hunting; real estate, rental and leasing; and retail trade.
