Price Pressures Evident In ISM Services (And Demand Slippage Showing)

Price pressures were evident in April's slightly disappointing ISM Services report (57.1 vs 58.5 expected and 58.3 prior), with the prices index reaching an all-time high 84.6 percent, up 0.8pp from March and beating December's record.

• Overall the weaker headline reading was "mostly due to the restricted labor pool (impacting the Employment Index) and the slowing of new orders growth. Business activity remains strong; however, high inflation, capacity constraints and logistical challenges are impediments, and the Russia-Ukraine war continues to affect material costs, most notably of fuel and chemicals.”
• Worth noting that while biz activity remains strong overall, weaker/potentially weaker demand is cited by a few sectors in the anecdotes: “Overall business has softened.” [Information] / “Mortgage rates have skyrocketed...combined with historically high home prices — will temper new home demand at some point over the next 12 months.” [Construction] / “Cost pressures beginning to slow demand.” [Wholesale Trade]