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First Cut: Dallas Fed service sector index contracts further in April

The April general business conditions index in the Dallas Fed Texas Service Sector Outlook contracted further to -81.7 after plunging to -78.8 in March. However, the index for six months from now improved to -27.1 after 50.4. The uncertainty index was up to a new peak of 43.2 in April after 37.6 in March. Put together, while things were worse for service businesses in April, they weren’t a lot worse after the initial hit, and offered some hope that the bottom had been reached.


Given the drop off in the revenues index to -67.0 in March, the slightly higher -65.4 is not materially different. The slowdown in employment deepened to -35.2 in April after -23.8 in March with wages and benefits slower as well at -21.7 after -12.4. The hours worked index fell to -48.2 after -43.0 in the prior month.

Energy costs pulled the input prices index down to  -3.8 after 0.1 in March, a series low and the first and only negative since -1.8 April 2009. Selling prices hit a new low of -47.8 after -44.5.

The Dallas Fed headline index correlates fairly well (0.774) with the ISM Non-Manufacturing Index and adds to the outlook for a sub-50 reading when the data is reported at 10:00 ET on Tuesday, May 5.

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