The pace of growth in the U.S. services sector rose to a 5-month high in April, fueled by increases in business activity that offset a sharp decline in exports. The Institute for Supply Management said its services sector index rose to 57.8 last month, up from 56.5 in March.
Economists polled by Reuters were expecting a consensus reading of 56.2. A reading above 50 indicates expansion in the sector, while below indicates contraction. April’s ISM index reading was the highest it’s been since November.
The ISM’s index of business activity rose from 57.5 in March to 61.6 in April, which was also the highest reading since November. Analysts polled by Reuters forecast a reading of 57.9. The employment index was essentially unchanged, moving to 56.7 in April, up barely from 56.6 in March.
However, the exports index plummeted to 48.5, down from 59 the month prior and to its weakest reading since February 2014. A Commerce Department report released Tuesday also found the U.S. trade deficit ballooned on weak exports and increased imports. Despite the upbeat services sector report, overall, data suggest the economy contracted.