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First Cut: Richmond Fed service sector revenues strong in April

The Richmond Fed’s survey for the service sector in April showed the current revenues index up to 26, well above the 5 in March and the highest since 31 in August 2018. The index for expected revenues six months from now was about steady at 33 in April from 34 in February.

The Richmond survey’s measure of revenues has a solid correlation with the ISM Non-Manufacturing Index. While the jump in April is not likely to be fully reflected in the national report, it could point to a noticeably improvement from the 56.1 in March when the ISM index is reported at 10:00 ET on Friday, May 3.

Although the numbers from the New York Fed’s Business Leaders Survey and the Philadelphia Fed’s Non-Manufacturing Index are not particularly consistent in their correlation to the ISM report, both turned in respectable readings consistent with modest-to-moderate expansion in April. Both were also very little changed from the prior month. The New York Fed’s current business activity index was 10.9 in April from 10.8 in March.  The Philadelphia general business activity index was 21.0 after 21.7 in the prior month.

It may prove that the service sector has weathered the reset to slower expansion better and more quickly than manufacturing.

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