Services PMI® at 49.4%; April 2024 Services ISM® Report On Business®

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The April 2024 Services ISM® Report on Business revealed that the Services PMI® was at 49.4%, indicating a contraction in the services sector for the first time since December 2022. This marked the end of a 15-month period of growth. The Business Activity Index was at 50.9%, the New Orders Index at 52.2%, the Employment Index at 45.9%, and the Supplier Deliveries Index at 48.5%.

According to Anthony Nieves, Chair of the ISM® Services Business Survey Committee, the decline in the composite index was due to lower business activity, slower new orders growth, faster supplier deliveries, and continued employment contraction. This slowdown was reflected in the report, with 12 industries showing growth and six industries reporting a decrease in April.

Survey respondents highlighted various challenges and observations within their respective industries. For example, some mentioned inflation impacting unit costs, supply chain challenges leading to increased costs, and issues related to labor expenses and recruitment.

The report also included feedback from respondents in different sectors, such as Accommodation & Food Services, Arts, Entertainment & Recreation, Construction, Public Administration, Health Care & Social Assistance, Information, Management of Companies & Support Services, Retail Trade, Utilities, and Wholesale Trade.

Overall, the report indicated a shift towards contraction in April after a sustained period of growth in the services sector.

Services PMI®

Manufacturing PMI®

Series Index


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Percent Point Change


Rate of Change

Trend* (Months)

Series Index Apr

Series Index Mar

Percent Point Change

Services PMI®





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Business Activity/ Production










New Orders




















Supplier Deliveries















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Backlog of Orders





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New Export Orders





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The Inventory Sentiment increased to 62.9 from 55.7, a rise of 7.2. The sentiment was described as “Too High” and trending “Faster.” However, the Customers’ Inventories remained steady at 47.8 from 44.0, showing a slight increase of 3.8.

Regarding the overall economy, it was reported to be “Growing” but at a slower pace compared to the previous month. The Services Sector also indicated a contraction, shifting from a growing trend.

In the commodities sector, several items saw price increases including Caustic Soda, Construction Contractors, Copper Wire, and more. Propane was the only commodity that experienced a price decrease. Items in short supply included Brass Fittings, Electrical Components, and Labor, among others.

In April 2024, the Services PMI stood at 49.4 percent, down from 51.4 percent in March, indicating a slight contraction. However, a Services PMI above 49 percent generally signals an expanding economy, and for the 16th consecutive month, the overall economy was noted to be growing.

The historical data of the Services PMI showed fluctuations over time, with the April 2024 figure at 49.4 compared to 51.9 in October 2023.In March 2024, the Business Activity Index was 51.4, lower than the 53.4 recorded in September 2023. In February 2024, it was 52.6, down from 54.1 in August 2023. January 2024 saw a Business Activity Index of 53.4, compared to 52.8 in July 2023. In December 2023, the index was at 50.5, while in June 2023 it was 53.6. November 2023 recorded an index of 52.5, lower than the 51.0 in May 2023. The average for the 12 months was 52.2, with a high of 54.1 and a low of 49.4.

The Business Activity Index registered 50.9% in April 2024, showing a 6.5 percentage point decrease from the 57.4% in March. This indicates growth for the 47th consecutive month, with sectors like Accommodation & Food Services and Finance & Insurance reporting increased activity, while industries like Other Services and Real Estate experienced declines.

The percentage of higher business activity in April 2024 was 18.9%, while 69.5% reported the same level, and 11.6% indicated a lower level. The index for this period stood at 50.9. In March 2024, the percentages were 21.9%, 71.2%, and 6.9% for higher, same, and lower activity respectively, with an index of 57.4. February 2024 recorded 23.9% higher, 67.0% the same, and 9.1% lower activity, with an index of 57.2. As for January 2024, the percentages were 20.5%, 68.9%, and 10.6%, with the index not provided.




New Orders
ISM®‘s New Orders Index dropped to 52.2 percent in April from 54.4 percent in March, marking the 16th month of expansion following a contraction in December 2022. This ended a growth streak of 30 consecutive months. Comments from respondents mentioned reduced orders and a decline in sales leads.

In April, 12 industries experienced an increase in new orders, including Accommodation & Food Services, Agriculture, Forestry, Fishing & Hunting, Wholesale Trade, Construction, Mining, Utilities, Real Estate, Rental & Leasing, Finance & Insurance, Retail Trade, Educational Services, Public Administration, and Health Care & Social Assistance. On the other hand, three industries reported a decrease in new orders: Other Services, Information, and Professional, Scientific & Technical Services.

New Orders





Apr 2024





Mar 2024





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Jan 2024





The employment activity in the services sector declined in April for the fourth time in the last five months, with an Employment Index of 45.9 percent, down from 48.5 percent in March. Respondents cited reasons like delayed hiring due to labor market tightness and a hiring freeze in place leading to no backfilling of positions.

In April, five industries saw an increase in employment, namely Accommodation & Food Services, Management of Companies & Support Services, Construction, Mining, and Utilities. Conversely, 10 industries reported a decrease in employment, including Other Services, Real Estate, Rental & Leasing, Information, Finance & Insurance, Wholesale Trade, Retail Trade, Public Administration, Transportation & Warehousing, Health Care & Social Assistance, and Professional, Scientific & Technical Services.The numbers for March, 2024 show that supplier deliveries were 19.1% slower and 61.1% same compared to previous months, and 19.8% faster and 48.5% recorded for the index. Looking back to February, 2024, supplier deliveries were 13.5% slower and 65.9% same, with 20.6% faster and 48.0% for the index. In January, 2024, 16.2% of deliveries were slower and 63.3% were the same, while 20.5% were faster and the index was at 50.5%.

Supplier deliveries for April, 2024 were 2.5% slower, 91.9% the same, and 5.6% faster with an index of 48.5%. In March, 2024 the percentages were 3.8% slower, 83.2% the same, and 13.0% faster, with an index of 45.4%. Moving on to February, 2024, supplier deliveries were 5.0% slower, 87.7% the same, and 7.3% faster, with an index of 48.9%. In January, 2024, 11.3% of deliveries were slower, 82.2% were the same, and 6.5% were faster, with an index of 52.4%.

The Inventories Index increased in April after a period of growth.In April, the reading of 53.7 percent indicated an increase of 8.1 percentage points from March’s 45.6 percent, breaking a streak of four months of contraction. Approximately 48 percent of respondents in April mentioned that they either do not maintain inventories or do not track them. Comments from some respondents highlighted reasons for the uptick in inventories such as preparing for the hurricane season and stocking up inventory due to expected rises in demand during the spring and summer.

Among the industries, six reported an increase in inventories in April, including Retail Trade, Agriculture, Forestry, Fishing & Hunting, Transportation & Warehousing, Public Administration, Real Estate, Rental & Leasing, and Wholesale Trade. Conversely, seven industries experienced a decrease in inventories, notably Mining, Construction, Management of Companies & Support Services, Professional, Scientific & Technical Services, Information, Health Care & Social Assistance, and Utilities.

Prices paid by service organizations for materials and services surged for the 83rd consecutive month in April. The Prices Index stood at 59.2 percent, up by 5.8 percentage points from March’s 53.4 percent. This marked the 22nd month in a row where the index stayed near or below 70 percent, with 12 of the last 13 months below or at 60 percent. Previously, there were 10 straight months with readings near or above 80 percent from September 2021 to June 2022.

During April, fourteen services industries reported an increase in prices paid, including Construction, Management of Companies & Support Services, Public Administration, Other Services, Retail Trade, Accommodation & Food Services, Educational Services, Finance & Insurance, Real Estate, Rental & Leasing, Wholesale Trade, Information, Utilities, Health Care & Social Assistance, and Professional, Scientific & Technical Services. None of the industries reported a decrease in prices for the month.In April, the ISM® Services Backlog of Orders Index increased to 51.1 percent, a significant rise from the 44.8 percent reported in March. Notably, 45 percent of respondents in April mentioned that they do not track order backlogs. Some respondents noted variations such as “No backlog; supply is fine” and “Fewer backlogs for many areas, but vehicles and heavy equipment still impacted.”

Industries that observed an increase in order backlogs in April include Agriculture, Forestry, Fishing & Hunting; Real Estate, Rental & Leasing; Management of Companies & Support Services; Utilities; Educational Services; Finance & Insurance; Construction; Transportation & Warehousing; and Professional, Scientific & Technical Services. In contrast, industries reporting a decrease in order backlogs in April are Other Services; Information; Mining; Public Administration; Wholesale Trade; and Health Care & Social Assistance.

The New Export Orders Index saw a decrease in April to 47.9 percent, down from 52.7 percent in March. This decline followed 11 months of expansion out of the previous 12 months, with the only contraction occurring in October. Interestingly, 74 percent of respondents in April stated they do not engage in, or separately monitor, orders for services outside of the U.S.Industries that saw an increase in new export orders in April include Transportation & Warehousing, Utilities, and Professional, Scientific & Technical Services. On the other hand, Retail Trade, Information, and Wholesale Trade experienced a decrease in new export orders for the same month. Additionally, twelve industries did not see any significant change in new export orders for April.

Imports saw a growth in April, with an Index of 53.6 percent, which is 1.2 percentage points higher than March. This marks the expansion in 17 out of the last 20 months, with contractions in March and December 2023 and an unchanged status in May. Approximately 69 percent of respondents stated that they either do not use or do not monitor the use of imported materials.

In April, the industries that reported an increase in imports were Accommodation & Food Services, Real Estate, Rental & Leasing, Transportation & Warehousing, Management of Companies & Support Services, Utilities, Wholesale Trade, and Professional, Scientific & Technical Services. Conversely, Other Services and Health Care & Social Assistance experienced a decrease in imports. Additionally, nine industries reported no significant change in imports for April.The Inventory Sentiment Index continued to rise in April, marking the 12th consecutive month of growth after a brief contraction in April 2023. The index reached 62.9%, a notable increase from the previous month’s 55.7%. This indicates that respondents believe their inventory levels are too high given current business activity.

In April 2024, eleven industries expressed concerns about having excessive inventory, including Real Estate, Rental & Leasing; Agriculture, Forestry, Fishing & Hunting; Other Services; Wholesale Trade; Retail Trade; Mining; Utilities; Information; Health Care & Social Assistance; Management of Companies & Support Services; and Construction. Transportation & Warehousing was the only industry that felt their inventory levels were too low. Additionally, six industries reported stable inventory sentiment for the month.

The ISM® Services Inventory Sentiment Index data for April 2024 shows that 31.2% of respondents felt their inventory levels were too high, 63.4% believed their inventory levels were about right, and 5.4% considered their inventory levels too low, resulting in an overall index of 62.9%.

It’s essential to note that this national report differs from regional purchasing reports and provides a broad overview of the entire U.S. economy. The information presented is a result of a survey conducted among supply executives in the services sector. The accuracy and reliability of this data should be considered alongside other economic indicators for decision-making purposes.

The Services ISM® Report On Business, formerly known as the Non-Manufacturing ISM® Report On Business, is compiled from inputs gathered from purchasing and supply executives nationwide to provide insights into the services sector’s performance.The data collected by the Services Business Survey Committee is organized by NAICS codes to show each industry’s contribution to the gross domestic product (GDP). The sectors covered in the survey range from Agriculture to Public Administration to Health Care and beyond. The data is weighted according to each industry’s GDP contribution to provide accurate insights. The top six services sectors, according to BEA estimates, are Real Estate, Rental & Leasing; Public Administration; Professional, Scientific & Technical Services; Health Care & Social Assistance; Information; and Finance & Insurance.

The survey responses focus on comparing the current month to the previous month across various indicators such as Business Activity, New Orders, Inventory Change, Employment, and more. The data presented reflects the raw responses without alteration. Seasonal adjustments are applied to certain indicators like Business Activity, New Orders, Prices, and Employment. The remaining indexes do not typically show significant seasonal variations.

The Services PMI is a combined index based on four equally weighted indicators: Business Activity, New Orders, Employment, and Supplier Deliveries. It serves as a leading indicator reflecting the trend and extent of changes. An index reading above 50 indicates expansion in the services sector, while below 50 suggests contraction, with Supplier Deliveries being an exception.

The Services ISM Report on Business survey is conducted monthly with responses analyzed based on growth or contraction in various industries. The report is compiled and released on the third business day of the following month. The ISM owns the content of the Report on Business and grants limited access for personal, non-commercial use, prohibiting the creation of derivative works without explicit permission.

The Institute for Supply Management provides valuable insights through its reports covering Manufacturing, Services, and Hospital sectors. They issue reports with copyrighted content that should not be copied or manipulated without authorization. The ISM assumes no liability for errors or reliance on the information provided. Manufacturing PMI, Services PMI, and Hospital PMI are registered trademarks of the Institute for Supply Management.The Institute for Supply Management (ISM) is a prominent non-profit organization that serves as a professional body for supply management globally. With over 50,000 members across more than 100 countries, they oversee approximately $1 trillion in supply chain procurement for both corporate and government entities each year. Established in 1915 by industry practitioners, ISM is dedicated to enhancing the field of supply management to create value and competitive advantages for its members. They aim to contribute to a prosperous and sustainable world by offering resources such as the ISM® Report On Business®, various certification and training programs, corporate services, events, and assessments. The ISM® Report On Business®, covering Manufacturing, Services, and Hospital sectors, is highly esteemed as a reliable economic indicator. It provides valuable insights for professionals in supply management, economists, analysts, government officials, and business leaders. For further details, you can visit their website at

The complete version of the Services ISM® Report On Business® is available on ISM®’s website at on the third business day of each month after 10:00 a.m. ET, except for January when it is released on the fourth business day.

The upcoming Services ISM® Report On Business® with data from May 2024 will be published at 10:00 a.m. ET on Wednesday, June 5, 2024. Please note that this schedule may vary in case the New York Stock Exchange is closed.

For inquiries or further information, you can contact:
– Kristina Cahill
– Report On Business® Analyst, ISM® Research Manager
– Location: Tempe, Arizona
– Phone: +1 480.455.5910
– Email: Contact Kristina Cahill

SOURCE: Institute for Supply Management

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