U.S. service sector business activity rises slowly in April, PMI index falls to 53

The U.S. service sector business activity rose slowly in April, showed the IHS Markit data. The seasonally adjusted headline index dropped to 53 from March’s 55.3. The latest growth was widely consistent with the earlier released ‘flash’ figure of 52.9, and hinted at the slowest rise in output since March 2017. The upturn was below the long-run series average and showed a less strong beginning to the second quarter of 2019. Some companies noted that client demand was weak, and several survey respondents stated that increased competition and uncertainty had dented sales growth.

Similarly, new business grew at a slower pace in April. The upturn was the weakest for two years, in the midst of reports of less strong demand conditions. However, some companies stated that new client acquisitions had driven sales higher. The rate of new export sales growth was widely consistent with that seen in March and marginal overall.

Service providers also recorded a lower degree of sentiment in future output growth in April. Even if the respective index recorded well above the 50.0 neutral mark, the level of positivity fell to its lowest since mid-2016. Several survey respondents stated that increased uncertainty and more intense competition had dampened expectations towards the year ahead.

On the prices front, companies recorded a slower rise in input costs in April. Panellists commented that the weaker rise was attributed to less marked rises in raw material price. Service providers also recorded a less robust increase in output charges. The rise was only marginal in all and the slowest since October 2017. Some companies also recorded that greater competition had placed pressure on companies to keep selling price rises to a minimum.

In the meantime, the deceleration in new business led to a weaker rise in employment in April. The pace of job creation was just moderate and the slowest for two years. In spite of a slower rise in workforce numbers, service sector companies continued to register a rise in outstanding business in April. The rise was the fourth in as many months and widely consistent with the series trend.

At 17:00 GMT the FxWirePro's Hourly Strength Index of US Dollar was bearish at -76.9342 more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex