The U.S. services sector expanded at a slower pace in April as the non-manufacturing index fell to 56.8 from 58.8 in March, on a seasonally adjusted basis, the Institute for Supply Management reported Thursday.

An index reading below 50 signals a slowing economy, while a level above 50 suggests expansion.

Economists polled by IFR Markets had expected a 58.2 level.

ISM

The prices paid index rose to 61.8 from 61.5, the 26th consecutive month prices rose, the ISM said. The employment index declined to 53.6 from 56.6.

The business activity/production index fell to 59.1 from 60.6, the new orders index was at 60.0, up from 59.5; backlog of orders fell to 52.0 from 56.5; new export orders increased to 61.5 from 58.0; inventories rose to 57.0 from 53.5; inventory sentiment grew to 60.0 from 58.5; the supplier deliveries index slid to 54.5 from 58.5; and imports dipped to 54.5 from 55.0.

Members' general comments on business in the month included:

  • "National shortage of Class-A drivers and the increased demand for logistics is resulting in an increase in the cost of goods." (Accommodation & Food Services)
  • “The trade tensions are impacting purchasing of steel and are causing suppliers to send letters of concern regarding contracted purchases for this year and the future based on these proposed tariffs.” (Construction)
  • “Economy is humming along. [Activity in] both residential and commercial construction [is] apparent. Agriculture sector seems to be moderating at these commodity price levels. The international trade situation appears to be shifting on a minute-by-minute basis, which has folks nervous.” (Finance & Insurance)
  • “Continued shortage of drugs and products manufactured in Puerto Rico.” (Health Care & Social Assistance)
  • “Tax reform windfall continues to help business conditions.” (Management of Companies & Support Services)
  • “Steel tariffs/232 have impacted our steel costs (pipes, fittings, valves, vessels [and the like]).” (Mining)
  • “Some indicators of rising transportation costs, which will eventually affect product prices. Trade tariffs will cause unintended consequences on all industries, affecting production and non-production commodities.” (Professional, Scientific & Technical Services)
  • “Construction activity continues to remain strong in the region, resulting in capacity issues and shortages of labor, materials and subcontractors.” (Public Administration)
  • “Outlook is very promising as we approach a seasonal uptrend in business.” (Wholesale Trade)

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