ISM Non-Manufacturing Index (Apr) Actual 43.7, Expected 42.5, Previous 40.8

 

Release Explanation: Similar to the PMI numbers, ithis private survey interviews Purchase Managers on their sentiment on orders, hiring, inventories, and deliveries. Split into the Service Index (above), and then Service Prices which look at the rate of inflation when materials and services are purchased. This builds an economic picture of the strength of manufacturing activity ahead of official Government reports. These numbers usually are a pre-cursor to the PMI numbers later in the month. A currency can be very reactive to these surveys as over time they have been a reliable read on Government reports to come.

 

Trade Desk Thoughts: The service sector of the economy contracted for a sixth straight month in April, but at the slowest pace seen in six months, the Institute for Supply Management said today. The non-manufacturing index rose to 43.7 from the March reading of 40.8. Economists had expected the index would rise to 42.5.

 

The report makes up over 90% of the economy with Real Estate and Rental & Leasing reporting expansion for last month. Within the sub indexes, business activity/production and new orders contracted at a slower pace, while employment, which has now contracted for 11 straight months, contracted faster.

 

Prices and new orders decreased at a fast pace as did new export orders and imports. Businesses still said their inventories were too high. Producers noted that some inflation in commodities was being seen and that healthcare was seeing a slowdown in volume. Respondents from the Transportation & Warehousing sector said we are definitely feeling the recession in terms of business activity on all fronts.

 

Forex Technical Reaction: Stocks declined after the report was released and the dollar made some headway against the higher-yielding euro, pound and aussie.