- The Washington Times - Wednesday, May 5, 2004

NEW YORK (AP) — Service-sector activity carved out another record month of expansion in April, as employment and prices rose, according to a report released yesterday by a private research group.

The Institute for Supply Management said its non-manufacturing business index for April rose to 68.4, the best reading ever for the survey that began in 1997. The level in April put the overall index well above the 65.8 seen in March — also a record reading. April’s level also was much better than the 65 expected by economists.

The ISM’s non-manufacturing index comprises mainly services, which constitute the majority of U.S. economic activity. The index describes how many respondents report rising activity, but it doesn’t indicate the level of gains. Readings above 50 indicate expansion.

The group said its employment index stood at 54.5 in April, after reaching 53.9 in March. The group’s new orders index moved to 65.6; it was 62.8 the previous month.

Meanwhile, the ISM non-manufacturing prices index continued to indicate growing price pressures in the economy. It rose to 68.6, after having stood at 65.7 in March. April’s price index gain was the 25th straight month of expansion.



ISM non-manufacturing survey director Ralph Kauffman told reporters that some respondents were reporting rising steel prices and shortages.

Otherwise “there was not a whole lot of worry about inflation in this report,” he said.

The ISM service-sector activity report came during a key week for financial markets. The Federal Reserve met on Tuesday in a critical gathering that opened the door for the first interest-rate increase since May 2000. The central bank refrained from adjusting its 1 percent short-term target rate and presented a more optimistic economic outlook.

The ISM reported earlier this week that factory activity in April also was strong.

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