Demand, Jobs in U.S. Service Industries Collapsed in April

(C) Reuters. Demand, Jobs in U.S. Service Industries Collapsed in April

(Bloomberg) — Demand and employment in U.S. service industries collapsed in April, adding to signs of an historic economic contraction this quarter caused by the coronavirus pandemic.

Measures of business activity, new orders and employment all fell to record lows last month in figures going back to 1997, according to survey data from the Institute for Supply Management on Tuesday. The industries in ISM’s report represent about 90% of the economy.

With similar plunges recorded in ISM’s manufacturing gauges released last week, the figures underscore an economy shrinking at a pace without modern precedent. The group’s gauge of services employment dropped by 17 points to 30 ahead of government figures due Friday that are forecast to show more than 20 million job losses last month.

“I don’t anticipate there will be a V-shaped recovery,” Anthony Nieves, chairman of the group’s non-manufacturing business survey committee, said on a call with reporters.

Readings below 50 indicate shrinking activity, and 16 non-manufacturing industries reported contraction, led by entertainment, agriculture and retail trade.

The ISM’s main, composite non-manufacturing index fell by 10.7 points to an 11-year low of 41.8, compared with the 38 median estimate of economists surveyed by Bloomberg. The composite gauge reflects a surge in the supplier-delivery index to a record 78.3, indicating longer lead times.

While that usually indicates strains from elevated demand, the deliveries index now reflects virus-related disruptions in supply lines and business closures.

(C)2020 Bloomberg L.P.