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ISM chart and excerpts below by permission from the Institute for Supply Management® ISM®

ISM is a diffusion index with numbers above 50 indicating expansion and below 50 contraction.

A weakness of diffusion indexes is direction matters more than amount. For example, a business hiring 2 people would offset a business firing 300.

Please consider the April 2025 Services ISM^® Report On Business^® emphasis mine.

ISM^®’s Business Activity Index registered 53.7 percent in April, 2.2 percentage points lower than the 55.9 percent recorded in March, a 59th straight month of expansion. The Business Activity Index has been in expansion territory since its coronavirus pandemic lows. Comments from respondents include: “We are seeing a more conservative approach both domestically and internationally as a result of the current U.S. policies” and “People rushing to purchase vehicles in advance of the tariffs.”

Prices

Prices paid by services organizations for materials and services increased in April for the 95th consecutive month. The Prices Index registered 65.1 percent, 4.2 percentage points higher than the 60.9 percent recorded in March. The April reading is the index’s highest since January 2023 (65.8 percent), as well as its fifth consecutive month above 60 percent and the 30th in a row below 70 percent.

Seventeen of the 18 services industries reported an increase in prices paid during the month of April, in the following order: Wholesale Trade; Mining; Construction; Other Services; Information; Real Estate, Rental & Leasing; Agriculture, Forestry, Fishing & Hunting; Retail Trade; Transportation & Warehousing; Professional, Scientific & Technical Services; Finance & Insurance; Accommodation & Food Services; Public Administration; Utilities; Educational Services; Management of Companies & Support Services; and Health Care & Social Assistance. The only industry reporting a decrease in prices paid in April is Arts, Entertainment & Recreation.

Respondent Comments

• “Sales and traffic have improved on track with year-over-year seasonal trends. We seem to be outperforming some of the publicly traded restaurants reporting results.” [Accommodation & Food Services]
• “Tariffs are negatively impacting small business customers. Many small business customers source their products from China. They cannot afford to compete in the marketplace sourcing from other countries. We could not move products fast enough to beat the tariff starting dates.” [Agriculture, Forestry, Fishing & Hunting]
• “Business is steady.” [Construction]
• “There is great concern at my institution (medical school with a research institute and hospital) that changes from the current administration will severely and adversely affect many of the populations we are trying to help live healthier lives.” [Educational Services]
• “We are actively reviewing the impact of tariffs. We are seeing some vendors increasing their prices, and we are actively pushing back on those increases. We expect our vendors to honor our contracted pricing.” [Health Care & Social Assistance]
• “Generally, pricing is lower, but there is some uncertainty of actual, final costs due to tariffs.” [Other Services]
• “Our business is in a state of crises with uncertainty caused by both the ongoing trade war and the threats to federal funding of programs.” [Public Administration]
• “Uncertainty remains the dominating theme as the U.S. government has been maddeningly inconsistent with tariff implementation.” [Real Estate, Rental & Leasing]
• “Tariffs and concerns about government grants still impacting our procurement operations. Some projects are slowing or being held off to ensure we have funds to complete the current work.” [Transportation & Warehousing]
• “The tariff uncertainty is causing a lot of consumption of human capital. We are starting to see some tariff charges, some are significant given the price of the highly specialized units that were ordered over two years ago. Based on our spend over the last couple of years, we will have to adjust our capital and operations and maintenance plans.” [Utilities]

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