US services sector activity strengthens in April

The services sector activity in the United States strengthened in April, roughly as expected, according to survey data released on Wednesday, as new orders remained resilient and supply logistics improved.

The S&P Global's services sector Purchasing Managers' Index improved from a reading of 52.6 for March to 53.6 in April.

Economists had expected a reading of 53.7.

A number above 50 indicates the services sector is expanding, and the latest figure was in line with the expectations of analysts.

Fourteen services industries reported growth, with only three logging a decline including mining and wholesale trade, the survey report said.

Anthony Nieves, survey chair of Institute for Supply Management said in a statement that there has been a slight uptick in the rate of growth for the services sector, due mostly to the increase in new orders and ongoing improvements in both capacity and supply logistics.

The new orders registered its sharpest rate of growth in April, alongside an acceleration both in the rate of output growth and in that for employment.

The business activity index eased during the period, the survey shows.

The services sector activity has expanded for a fourth straight month.

The sector has grown for 34 of the last 35 months, with a "lone contraction in December," ISM said.

Companies are more positive when it came to the outlook for their levels of output over the year ahead, the survey said.

Commenting on the PMI results, Chris Williamson, chief business economist at S&P Global Market Intelligence said April saw an encouraging acceleration of service sector growth which, combined with indications of a renewed upturn in manufacturing, suggests the economy has regained some momentum at the start of the second quarter.

"Much of course depends on whether this recovery in demand can persist. Headwinds from higher interest rates and the increased costs of living, combined with the winding down of household savings, suggest the upturn could lose steam in the months ahead," he added.