U.S. services companies expanded at a faster pace in April, good news for the overall American economy.
The Institute for Supply Management, a trade group of purchasing managers, said Wednesday that its services index rose last month to 57.5 from 55.2 in March. Anything above 50 signals that the services sector is growing — something it’s done for 88 straight months.
Sixteen services industries reported growth last month, led by wholesalers and utilities. Only one industry grouping — covering agriculture, forestry, fishing and hunting — contracted in April.
Production, new orders, prices and export orders all grew faster last month. Hiring grew but at a slower pace than it did in March. Anthony Nieves, chair of the institute’s services survey committee, said the hiring slowdown partly reflects a shortage of available labor now that the U.S. unemployment rate is down to 4.5 percent, the lowest level in a decade.
Overall, the report suggests that “economic activity appears to be starting (the second quarter) off on a steady note,” Jennifer Lee, senior economist at BMO Capital Markets, wrote in a research note.
Private services companies account for more than 70 percent of American jobs.
Uncertainty bothered some services companies responding to the ISM survey. One cited the murky outlook for an overhaul of the Obama administration’s health care law; another, geopolitical instability, including tensions surrounding North Korea.
Other recent service sector indicators haven’t been as upbeat as the ISM’s index. The Commerce Department reported last week that consumer spending on services rose from January to March at the weakest pace in four years. And services companies have added 1.82 million jobs over the past year, the smallest annual gain in four years.