| Consensus | Consensus Range | Actual | Previous | |
| Composite Index | 47.6 | 48.8 | ||
| Services Index | 46.5 | 46.5 to 46.8 | 46.5 | 48.8 |
Highlights
The composite index slipped to 47.6 in April from 48.8 in March, the fourth consecutive monthly decline, pushed lower by the services industry which saw the reading fall to 46.5 from 48.8 the month before. That's the lowest reading in nearly two-and-a-half years.
Private sector services companies are in a bind due to slipping demand. Despite input costs hitting a 29-month high, companies were forced to refrain in large part from passing price increases on to their clients.
For the coming twelve months, services firms remained optimistic, though to a lesser degree than in previous months. They cited rising inflation fears stemming from the Middle East conflict, particularly for fuel and energy.
Earlier this week, the manufacturing component rose to 52.8 from 50.0 in March as companies accelerated production stemming from increased new orders. This also was due to the Middle East conflict as they are trying to get ahead of further price increases and supply chain bottlenecks.
Today's results are not an auspicious start to the first quarter despite the increased manufacturing activity. Services are likely to continue to remain a drag, even if there is a quick resolution to the conflict.
Market Consensus Before Announcement
The consensus looks for no revision from 46.5 in the flash for services.
Definition
The Composite Purchasing Managers' Index (PMI) provides an estimate of private sector output for the preceding month by combining information obtained from surveys of around 750 manufacturing and service sector companies. Results are synthesised into a single index which can range between zero and 100. A reading above (below) 50 signals rising (falling) output versus the previous month and the closer to 100 (zero) the faster is output growing (contracting). The report also contains the final estimate of the services PMI. The data are provided by S&P Global.
Description
Investors need to keep their fingers on the pulse of the economy because it dictates how various types of investments will perform. By tracking economic data such as the purchasing managers' manufacturing indexes, investors will know what the economic backdrop is for the various markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly and causing potential inflationary pressures.