Unsurprisingly, the ISM Non-Manufacturing Index for April shows the services sector of the economy dropped precipitously.
Prior to the COVID-19 shock, services were driving growth, as manufacturing was in a slump. According to the index, services were still growing through March when it registered 52.5. A reading above 50 in the ISM index signifies growth. That is a testament to how well the economy was doing until a few short weeks ago that services were still growing through a half-month shutdown.
But no sector of the economy can withstand the Great Pause. The index fell almost 11 points to 41.8 in April, which is strongly in contractionary territory and the lowest mark since March 2009.
Sadly, the reading could’ve been even worse. The length of time for businesses to receive supplies increased, which is usually a sign of strong growth. In the current context it is emblematic of a shuttered economy.
With shutdowns beginning to ease across the country, there is hope this is a one-time aberration and May will show a strong rebound. This metric is a key one to watch as it will give us a sense of how much consumers are getting back to spending.
–Curtis Dubay, Senior Economist, U.S. Chamber of Commerce