- Business activity index vs 55.9 prior
- Employment 47.9 vs 48.0 prior
- New orders 57.3 vs 53.5 prior
- Prices paid 71.3 vs 70.7 prior
- Supplier deliveries 55.2 vs 56.8 prior
- Inventories 62.5 vs 53.1 prior
- Backlog of orders 51.3 vs 53.0 prior
- New export orders 50.0 vs 52.1 prior
- Imports 51.1 vs 54.7 prior
- Inventory sentiment 55.2 vs 55.1 prior
The details are a tad worse than the headline and that prices paid number is worrisome. Despite several indicators showing a better jobs market, this one is still in contraction.
Comments in the report:
- “We are seeing the dual effects of the administration’s tariff
policy dynamics and the conflict in the Persian Gulf affect our pricing.
Suppliers across numerous industries are trying to pass price increases
for fuel surcharges and increased input costs for resin-based products
and the like. This is the definition of inflationary pressure starting
to affect us. We expect significant cost increases to impact us by late
second quarter (Q2) and definitely in Q3.” [Accommodation & Food
Services] - “Starting to see increased supply constraints and associated price
increases, especially for construction materials and computers like
laptops and tablets.” [Educational Services] - “Patient volumes and activity remain high, employment is steady and
supply chains are operating effectively. There are some product lines on
allocation as a direct result of the Middle East conflict; however, the
current state is manageable. Another concerning factor on the horizon:
the current drop-out rate on Affordable Care Act (ACA) health insurance
plans after the federal subsidy was eliminated as of January 1.
Year-to-date dropout rates are approaching 14 percent, indicating we may
be seeing a potential increase in uninsured patients in the foreseeable
future. The short-term forecast is cautious optimism.” [Health Care
& Social Assistance] - “The groundwood paper market remains tight. The announced sale of
Norpac to International Paper has caused some tightness. We figure
intellectual property issues will eventually take Norpac out of the book
market. Freight remains expensive, with gas prices and fuel surcharges
starting to come through.” [Information] - “Effective commodity prices (oil) have increased about 20 percent so far in 2026.” [Mining]
- “Due to rising fuel costs, a major distributor has decided to hold
freight with resellers until a new contract is negotiated that addresses
these increased expenses. Unfortunately, this means there will be
delays that will impact our internal projects.” [Public Administration] - “Supply chain reliability for aviation parts and consumables has
generally improved, but volatility in jet fuel prices — driven by
geopolitical and logistics disruptions — continues to complicate
forecasting and inventory planning. Wage inflation and a tight labor
market for skilled personnel are increasing supplier service costs, and
growing sustainability expectations are raising demand (and cost) for
sustainable aviation fuel, with availability still uneven by region.
Overall, conditions are more stable than during the peak of supply chain
disruptions, but elevated fuel, labor and sustainability-related costs
remain key factors shaping our purchasing strategy and industry
outlook.” [Transportation & Warehousing] - “Inflationary pressures continue to impact pricing in certain
categories. General concern over supply continuity due to unprecedented
demand continues in the utility space.” [Utilities] - “Capital expenditure energy projects continue to be delayed or
revamped based on macroeconomic factors. Data center power generation
projects are driving demand and reducing available inventory across the
piping market.” [Wholesale Trade]
Before today’s report, the ISM services report showed the U.S. services sector remained in expansion through April, though the details were more mixed than the headline suggested. The Services PMI slipped to 53.6 from 54.0 in March, marking the 22nd straight month above the 50 threshold.
This article was written by Adam Button at investinglive.com.
