Economic Watch: Non-Manufacturing Activity Highest Since August

May 5, 2014

By Evan Lockridge

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Economic activity in the nation’s non-manufacturing sector grew in April for the 51st consecutive month, hitting its highest level since last August, according to the nation’s purchasing and supply executives in the latest Non-Manufacturing Report On Business.

The report from the Institute for Supply Management shows the Non-Manufacturing Index registered 55.2% in April, 2.1 percentage points higher than March's reading of 53.1 percent.

The Non-Manufacturing Business Activity Index increased substantially to 60.9%, which is 7.5 percentage points higher than the March reading of 53.4%, reflecting growth for the 57th consecutive month at a much faster rate.

The New Orders Index registered 58.2%, 4.8 percentage points higher than the reading of 53.4% registered in March.

The Employment Index decreased 2.3 percentage points to 51.3% from the March reading of 53.6 percent, indicating growth for the second consecutive month, but at a slower rate.

According to the NMI, 14 non-manufacturing industries reported growth in April with the majority of survey respondents' comments indicating both business conditions and the economy are improving.

Despite the better numbers, Sterne Agee Chief Economist Lindsey Piegza is not that bullish on the report.

“Service activity tends to lag behind cyclical changes in consumer activity, trends more readily evident in manufacturing activity. More recently the ISM Manufacturing Index improved to 54.9 in April, the third consecutive month of improvement after falling to 51.3 in January,” she said. “Service activity, on the other hand has been on the decline since August. At this point, both service and manufacturing activity remains uneven amid volatile economic activity.”

She noted the economy slowed to a near halt at the start of the year, and while the “recent rebound is a welcomed step in the right direction relative to the weakness in January, looking on a longer-term basis, the recent increase in activity is hardly a reversal to previous post-recession highs and does little to reinstate confidence in a sustainable recovery going forward into the second half of the year.”


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