U.S. services businesses saw their steepest drop in activity in April since the Great Recession with the Institute for Supply Management’s non-manufacturing index falling to 41.8, its lowest reading since March 2009.
Yes, but: The survey's prices paid index jumped to its highest since January and firms said they had seen the highest percentage of price increases since May 2018.
- Why it matters: Despite the destruction in overall demand and waves of job losses, prices are not only holding firm — they are rising.
But, but, but: ISM's data shows price increases have been largely in the health care sector where the coronavirus pandemic has increased shipping costs as demand has skyrocketed and the number of flights, largely from China, carrying medical supplies has plunged.
- The price increases also were noted in other areas, however, such as cleaning products, disinfectants and alcohol.
What's next: "When we come out of this lockdown, I don’t project or anticipate a V-type recovery, so I don’t know how prices will correlate to demand levels," Anthony Nieves, chair for ISM's non-manufacturing business survey committee, said during a call with reporters.