COVID-19 Economic Data: Non-Manufacturing Measure for April Falls Off Cliff

By at 6 May, 2020, 11:37 am

by Raymond J. Keating-

As was the case with last week’s report on manufacturing from the Institute for Supply Management (ISM), the non-manufacturing ISM index tanked in April.

The services sector declined in April, with the non-manufacturing PMI falling to 41.8 percent – the lowest level since March 2009 during the Great Recession – and down from 52.5 percent in March and 57.3 percent in February. Anything under 50 percent indicates that the services sector is contracting.

Three key sub-sectors basically fell off a cliff.

The Business Activity Index came in at 26.0 percent. That was down by 22 percentage points compared to 48.0 percent in February. Previous measures registered 57.8 percent in February and 60.9 percent in January.

The New Orders Index registered 32.9 percent, down by 20 percentage points versus the 52.9 percent for March. This index came in at 63.1 percent in February and 56.2 percent in January.

The Employment Index fell to 30 percent, off by 17 percentage points compared to March’s 47.0 percent. The Employment Index had registered 55.6 percent in February and 53.1 percent in January.

The ISM manufacturing and non-manufacturing reports provide powerful indicators of how deep this economy has fallen in a strikingly short period of time, while at the same time pointing to a long haul for recovery, and eventual expansion for businesses and workers in manufacturing and services sectors.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.


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