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Financial News: U.S. Service Sector Growth Unexpectedly Slows In April

U.S. Service Sector Growth Unexpectedly Slows In April

05/03/2019 - 10:33:00 (RTTNews)

(RTTNews) - A report released by the Institute for Supply Management on Friday unexpectedly showed a continued slowdown in the pace of U.S. service sector growth in the month of April.

The ISM said its non-manufacturing index dropped to 55.5 in April after falling to 56.1 in March, with the index hitting its lowest level since a matching reading in August of 2017.

While a reading above 50 still indicates growth in the service sector, economists had expected the index to inch up to 57.0.

The unexpected decrease by the headline index was partly due to a slowdown in new orders growth, as the new orders index dipped to 58.1 in April from 59.0 in March.

The employment index also slumped to 53.7 in April from 55.9 in March, pointing to a slowdown in the pace of job growth in the service sector.

The data contradicts the Labor Department's closely watched monthly jobs report, which showed employment in the service-providing sector jumped by 202,000 jobs in April after climbing by 158,000 jobs in March.

Meanwhile, the ISM said its reading on business activity in the service sector rose to 59.5 in April from 57.4 in the previous month.

"The non-manufacturing sector has experienced an uptick in business activity, but in general, there has been a leveling off," said Anthony Nieves, Chair of the ISM Non-Manufacturing Business Survey Committee.

He added, "Respondents are still mostly optimistic about overall business conditions, but concerns remain about employment resources."

The report said the prices index tumbled to 55.7 in April from 58.7 in March, indicating a slowdown in the pace of price growth.

On Wednesday, the ISM released a separate report showing U.S. manufacturing activity expanded at its slowest pace in well over two years in April.

The ISM said its purchasing managers index slid to 52.8 in April after unexpectedly climbing to 55.3 in March, hitting its lowest level since October of 2016.

A reading above 50 still indicates growth in the manufacturing sector, although economists had expected the index to show a much more modest decrease to 55.0.

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