U.S. Service Sector Growth Slows in April Amid Cost Pressures and New Order Decline

The Institute for Supply Management (ISM) reported on May 5 that the expansion of the U.S. service sector slowed for the second consecutive month in April. According to Jin10, this was influenced by the largest decline in new orders in three years and sustained cost pressures at levels seen since late 2022. The ISM Non-Manufacturing PMI fell from 54.0 in March to 53.6 in April, slightly below the expected 53.7. While the business activity index rose by 2 points to 55.9, other components showed weaker performance. The new orders index dropped from a three-year high of 60.6 in March to 53.5, marking a 7.1-point decrease, the largest since March 2023. Meanwhile, cost pressures remained unchanged, with the prices paid index holding steady at 70.7, a high not seen since October 2022. The ongoing conflict in Iran has not only driven up energy prices but also caused supply chain bottlenecks, extending delivery times for essential business materials. According to data from the American Automobile Association, motor fuel prices have reached their highest level since the summer of 2022. The ISM supplier deliveries index, which rises as delivery times lengthen, increased from 56.2 in March to 56.8, the highest since July 2022.