ISM Non-Manufacturing Index Shows Very Strong Month

All 18 non-manufacturing industries in the April ISM report composite growth, leading another very strong month where strength perhaps is understated by the 56.8 headline which falls under Econoday's low estimate. Holding down the composite headline is less pressure on delivery times which however remain extended in continuing evidence of shipping pressures and shortages. New orders remain exceptionally strong, at 60.0, with export orders even stronger at 61.5 (strength echoed in today's jump in service exports in the international trade report).

ISM's sample includes not only service industries but mining, which has been very strong and is also the leading industry in April, and also construction, which despite possible snags due to metal tariffs, is near the top. Though immediate effects are uncertain, tariffs were a hot topic for respondents who expressed their concerns over related business disruptions and the risk unexpected outcomes.

Higher input costs are certainly one risk of tariffs with this reading up 3 tenths to a very elevated 61.8. Other readings in today's report include a 3 point dip in employment to 53.6 which still points to strength but won't be raising expectations for tomorrow's employment report. Employment and deliveries aside, April's report once again highlights ISM non-manufacturing as one of the strongest small-sample surveys on the calendar.