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The US services sector grew at a faster-than-expected rate in April, according to two key readings released Wednesday.
The Institute of Supply Management’s non-manufacturing index rose to 55.7.
It had been expected to improve to 54.8 from 54.5. A reading above 50 indicates expansion.
ISM said the index measuring new orders climbed, the employment gauge rose for a second straight month, while the prices index rose for the first time in three months.
Services make up 80% of the US economy, and so data on the sector are an important way of feeling the overall pulse.
As for anecdotes, one respondent to ISM’s survey noted that the recent upturn in oil prices created a more positive outlook, although it hasn’t been enough to boost hiring. Another noted that a severe non-skilled labor shortage is hurting the construction industry.
“We are happy to see the headline number rise but we aren’t sure that the ISM non-manufacturing index has much to say about thefuture,” wrote Pantheon Macroeconomics’ Ian Shepherdson in a note.
“As far as we can tell, is [sic] mostly just lags the performance of core retail sales. Even the employment component is not a reliable indicator of payrolls; the sharpy [sic] slowdown it has implied in the past couple of months hasn’t happened.”
Markit’s final services purchasing manager’s index (PMI) came in at 52.8 for April.
The flash reading released last week was 52.1.
Growth happened at the fastest pace in three months, led by a greater volume of incoming work as client demand increased.
However, job creation slowed down. Markit’s survey found that 160,000 jobs were added during the month, down from an average of 200,000 in the first quarter.
“The PMI surveys show the economy continuing to pick itself up after the stagnation seen in February, with growth accelerating for a second successive month in April,” Markit chief economist Chris Williamson said.
“However, the rate of expansion remains tepid, reliant on sluggish growth in services as manufacturers report a stalling of production.”