The pace of growth in the U.S. services sector unexpectedly eased in April, according to an industry report released on Wednesday.
* The Institute for Supply Management said its services index fell to 52.8 last month from 57.3 in March. * That was well below economists' forecasts for 57.4, according to a Reuters survey. * A reading above 50 indicates expansion in the sector.
CHRIS RUPKEY, CHIEF FINANCIAL ECONOMIST, BANK OF TOKYO/MITSUBISHI UFJ
ISM fell sharply for the larger, services part of the economy, and this has brought the economic data back to the front burner of market concerns. Economic weakness always brings in buyers and bonds have moved to new highs as it looks like the higher gasoline prices are indeed causing a soft patch for the economy. The market thinks that will delay any Fed tightening to late in 2012.
RUDY NARVAS, SENIOR ECONOMIST, SOCIETE GENERALE, NEW YORK
It was weaker than expected but seasonal factors were pretty strong, suggesting that it would weigh on the index. New orders was down, which is disappointing and employment was down as well but on the other hand you saw a down tick in prices paid.
TOM PORCELLI, CHIEF U.S. ECONOMIST, RBC CAPITAL MARKETS, NEW YORK
We're surprised at the weakness in service activity, we did not expect it would pullback this month, we are at the lowest in multiple months. It's very surprising, new orders fell sharply, employment, all the underlying numbers you would want to hold up, didn't. It's a disappointing report.
I think it's a little too early to say this is the beginning of a meaningful softening in activity, but this also means that the employment report on Friday gets even greater emphasis. You're going to need something to refute the utter weakness from this report.
PIERRE ELLIS, SENIOR ECONOMIST, DECISION ECONOMICS, NEW YORK
It's a weak indication not only in the headline figure, but also in the worst possible place: the orders component. That component factors into the calculation on the headline number. The orders index fell nearly 12 points which is obviously a big hit. It hasn't been this low in many months. This is a sector that is supposed to be relatively smooth in terms of growth so if it turns out to be more than transitory, this would be a clear indication of de-stabilization in the economy.
STOCKS: U.S. stocks add to losses.
BONDS: U.S. bond prices extend gains.
FOREX: The dollar extends losses versus yen, hits session lows versus euro