Key Takeaways

• Services growth slows: The ISM non-manufacturing PMI eased to 53.6 in April from 54.0 in March, marginally below the 53.7 expected.
• Still in expansion territory: Any reading above 50 signals growth, so the sector continues to expand — just at a slower pace.
• Prices paid steady: The closely watched prices index held at 70.7, undershooting expectations of 73.7.
• Inflation acceleration ahead: Analysts expect prices paid to climb as the Iran war energy shock works its way through the broader economy.
• Sector matters big: Services account for the bulk of U.S. economic activity, making this gauge a key barometer of overall momentum.

Activity in the key U.S. services sector expanded at a slower pace in April, while a gauge of prices paid by these businesses held steady — though it is widely expected to accelerate as the energy shock stemming from the Iran war ripples through the wider economy.

The U.S. non-manufacturing purchasing managers’ index from the Institute for Supply Management came in at 53.6 last month, down from 54.0 in March and slightly below economists’ expectations of 53.7.

A reading above 50 indicates expansion. Making up the bulk of overall economic activity, the services sector is closely tracked as a major engine of U.S. growth.

Meanwhile, the measure of prices paid by these companies held at 70.7 — coming in below expectations of 73.7.