U.S. ISM Services Index (April 2026)

ISM Services Index edges lower in April on slowing orders

• The ISM Services index pulled back modestly in April, slipping 0.4 points to 53.6 from 54.0 in March. While still firmly in expansionary territory, the pace of growth slowed, with 14 of 18 industries reporting expansion, down from 15 previously.
•  Momentum in new demand cooled sharply as the new orders index fell 7.1 points to 53.5, retracing the gains made in February and March. While still expanding, the slowdown suggests front loaded demand may be fading amid growing uncertainty. 
• In contrast, business activity strengthened, rising 2.0 points to 55.9 and recouping March’s decline. The improvement points to resilient current period output even as forward looking indicators softened.
•  Labor market conditions remained weak but showed tentative stabilization. The employment index rose 2.8 points to 48.0, its second consecutive reading in contraction territory, signaling continued caution on hiring despite improved activity.
• Supply conditions tightened further, with supplier deliveries edging up 0.6 points to 56.8, indicating slower deliveries. Meanwhile, international trade indicators improved slightly, with export orders rising to 52.1 even as imports eased marginally.

Key Implications

• The services sector continues to expand, but the sharp cooling in new orders alongside still subdued employment momentum suggests growth may be becoming less durable. At the same time, the prices paid index remained elevated at 70.7, underscoring that cost pressures remain intense even as activity growth moderates.
• With prices holding at their highest level since late 2022, today’s report reinforces concerns that services sector inflation remains sticky. Combined with resilient activity levels, this supports the case for the Fed to remain patient, particularly as energy, freight, and labor costs continue to feed through to prices. 

Disclaimer

This report is provided by TD Economics. It is for informational and educational purposes only as of the date of writing, and may not be appropriate for other purposes. The views and opinions expressed may change at any time based on market or other conditions and may not come to pass. This material is not intended to be relied upon as investment advice or recommendations, does not constitute a solicitation to buy or sell securities and should not be considered specific legal, investment or tax advice. The report does not provide material information about the business and affairs of TD Bank Group and the members of TD Economics are not spokespersons for TD Bank Group with respect to its business and affairs. The information contained in this report has been drawn from sources believed to be reliable, but is not guaranteed to be accurate or complete. This report contains economic analysis and views, including about future economic and financial markets performance. These are based on certain assumptions and other factors, and are subject to inherent risks and uncertainties. The actual outcome may be materially different. The Toronto-Dominion Bank and its affiliates and related entities that comprise the TD Bank Group are not liable for any errors or omissions in the information, analysis or views contained in this report, or for any loss or damage suffered.