Photo: Revisorweb via Wikimedia Commons

Photo: Revisorweb via Wikimedia Commons

Economic activity in the nation’s service sector increased in April, according to two reports released on Tuesday.

The non-manufacturing sector grew in April for the 63rd consecutive month, hitting its highest level since November, based on the Institute for Supply Management’s Non-Manufacturing Index, which surveys the nation’s purchasing managers.

It registered 57.8% in April, 1.3 percentage points higher than the March reading of 56.5%.

A reading above 50% represents growth in the non-manufacturing sector.

The Non-Manufacturing Business Activity Index increased substantially to 61.6%, which is 4.1 percentage points higher than the March reading of 57.5%, reflecting growth for the 69th consecutive month at a faster rate.

The New Orders Index registered 59.2%, 1.4 percentage points higher than the reading of 57.8% registered in March.

According to the NMI, 14 of 18 non-manufacturing industries reported growth in April. The majority of respondents indicate that there has been an uptick in business activity due to the improved economic climate and prevailing stability in business conditions, according to the group.

Meantime, a separate report shows service sector output growth in April moderated since March, but was stronger than seen on average during the first quarter of 2015, according to the financial information service provider Markit.

Its final U.S. Services Business Activity Index registered 57.4 in April, down from 59.2 in March but still the second-highest reading since last September. Moreover, the index posted above its average for the first quarter of 2015 as a whole.

A reading above 50 indicates favorable conditions.

In contrast, the seasonally adjusted final Markit U.S. Composite PMI Output Index, which covers manufacturing and services, posted 57 in April, down from 59.2 in March and the lowest reading for three months. Slower growth of U.S. private sector output reflected weaker increases in both manufacturing production and service activity.

The proportion of service providers expecting a rise in business activity over the next 12 months was at 48%, and continued to exceed by a wide margin the number anticipating a fall, at just 2%. Anecdotal evidence from service sector companies pointed to new product launches, greater marketing budgets and confidence regarding the long-term U.S. economic outlook, according to Markit.

“Robust service sector growth adds to evidence that the economy is far from stalling, as indicated by the GDP numbers seen at the start of the year, supporting the Federal Reserve’s view of the economy growing at a ‘moderate’ rate,” said Chris Williamson, chief economist at Markit. “Together with the expansion signaled by the manufacturing survey, the service sector PMI so far points to the economy growing at an annualized rate of 3% in the second quarter, representing a nice rebound from the first quarter’s soft-patch [of  a 0.2% annual increase].

U.S. Trade Deficit Hits 6-Year High

A separate report released on Tuesday by the U.S. Commerce Department revealed in March the U.S. trade deficit with other countries skyrocketed more than 40% from the month before to $51.4 billion.

The trade deficit is the different in the value of between exports and imports.

The 7.7% increase in imports compared to a 0.9% increase in exports, indicates the trade deficit may have played a bigger role that first believed in an earlier government report showing the U.S. gross domestic product barely increased at an annual rate in the first three months of the year.

Some attribute the rise to the value of the U.S. dollar against currencies of major trading partners for the stumble while others say it was due to a backlog of freight at West Coast ports because of earlier labor disputes.

Regardless of the reason, some analysts say they won’t be surprised if revised numbers expected out later this month, show a negative performance in the nation’s GDP for the first quarter, though more are expecting better numbers for the current quarter.

About the author
Evan Lockridge

Evan Lockridge

Former Business Contributing Editor

Trucking journalist since 1990, in the news business since early ‘80s.

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