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First Cut: Richmond Fed service sector revenues nearly vanish in April

The Richmond Fed’s index for service sector revenues nearly vanished in April at -87 after 1 in March. It was a series low, as was the index for expected revenues. That fell to -50 after -6 in the prior month.

The details of the report showed demand was largely gone with the index at -72 in April after 9 in March. Employment was -34 in April and negative for the first time since -2 in May 2013 and also a series low after the -31 in March 2009. Wages were at -15 in April and the first contraction since -3 in July 2010 and a series low that bested the -11 in May 2009. Workers with available skills was at 11 in April after -11 in March and was the first positive since 2 in November 2017. The workweek index contracted to -50 in April after -4 in March and was by far a series low.

In spite of the declines in energy costs, the prices paid index was up to 3.87 in April after 3.34 in March, possibly reflecting the scarcity of some essential goods. Pricing power declined noticeably with the index at 1.45 after 2.56.

The Richmond Fed’s revenue index correlates well (0.819) with the ISM Non-Manufacturing Index. It points to a precipitous decline in activity for the national measure when it is released at 10:00 ET on Tuesday, May 5.

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