US services activity slows in April, PMI indicates softer growth

US services sector growth slowed for a second straight month in April, as softer demand and sustained cost pressures weighed on activity, according to a survey released Tuesday by the Institute for Supply Management.

The ISM nonmanufacturing PMI slipped to 53.6 from 54.0 in March, slightly missing economists’ expectations. Although the index remains above the 50 threshold that separates expansion from contraction, it points to a cooling pace of growth in a sector that makes up more than two-thirds of the US economy.

The deceleration was largely driven by a sharp pullback in new orders, with the sub-index dropping to 53.5 from March’s three-year high of 60.6, marking the steepest decline since March 2023.

At the same time, price pressures stayed elevated, with the prices paid index unchanged at 70.7, its highest reading since late 2022.

Higher energy costs tied to the US-led tensions with Iran, alongside ongoing supply chain disruptions, continue to weigh on businesses. Supplier delivery times extended further, with the index rising to 56.8, the highest level since July 2022.