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The Institute for Supply Management’s (ISM’s) purchasing managers’ index (PMI) for the U.S. service sector rose to 58.3% this month from 56.5% in March, after three consecutive months of declines.
Readings above 50.1% indicate growth; higher numbers signal stronger activity.
The index’s employment measure jumped from 48.5 last month to 54.0 now, indicating that service businesses are hiring for the summer season as the Omicron variant is receding.
“This is a post-Omicron rebound,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, told Business Insider. “Inflation pressures remain intense, but they seem no longer to be intensifying.”
At the same time, the institute’s PMI for manufacturing slipped slightly in the latest survey, dropping from 58.6 last month to 57.1 now.
Supply chain clogs and inflation—worsened by the Ukraine war and sanctions—conspired to slow production, cut down on new orders, and add to backlogged orders, BI reported.
“The U.S. manufacturing sector remains in a demand-driven, supply chain-constrained environment,” ISM chair Timothy Fiore said in a statement accompanying the survey report.
The manufacturing sector may weaken still more as commodity prices rise, especially if the Ukraine conflict remains unsettled for long, BI noted.
TREND FORECAST: As we have noted since Russia invaded Ukraine, Western sanctions are damaging the world’s manufacturing economy, not just Russia’s.
The longer the war and sanctions continue, the likelihood will increase that citizens in the Western alliance will lose patience and gravitate toward pundits and politicians who question the wisdom of continuing them.