- The ISM Manufacturing index registered 60.7 in April while the ISM Services Index recorded 62.7
- The unemployment rate rose from 6.0% to 6.1% in April
- The U.S. trade deficit reached a record $74.4 billion in March
Top Three Market Headlines
Expansion of Business Activity Continues in April: The rebound in U.S. economic activity continued in April, albeit at a slightly slower pace, according to surveys of business executives released by the Institute for Supply Management (ISM). The ISM reported that its Manufacturing Index registered 60.7 in April, down slightly from 64.7 in March, but still reflecting growth in business activity (a reading above 50 indicates expansion of activity while a sub-50 mark reflects contraction). The services sector saw a similar pattern, as the ISM Services index registered 62.7, down one point from the index’s all-time high in March.
April Jobs Report Disappoints: The Department of Labor reported last Friday that nonfarm payrolls grew by only 266,000 in April. This was well below expectations, as many analysts had forecasted an increase of as many as one million new jobs. The additional new jobs failed to outpace unemployment filings as the unemployment rate increased slightly to 6.1% from 6.0% the prior month. The report suggests that employers are having a tough time filling jobs as the economy reopens, despite the unemployment rate remaining above pre-pandemic lows. Most job gains in the month occurred in COVID-sensitive industries, such as leisure and hospitality.
U.S. Trade Deficit Hits Record High: The U.S. trade deficit jumped to a record $74.4 billion in March, the Department of Commerce reported last week, up from $70.5 billion in the prior month and $47.2 billion one year prior. As the U.S. economic recovery gained steam, surging demand for foreign products drove the goods deficit up 4% to $91.6 billion, with notable increases among industrial supplies, capital goods, and consumer goods. At the same time, America’s surplus in services trade, items such as airline flights, financial services, and consulting fees, shrank to a new decade low of $17.1 billion. Notably, the trade deficit with China rose 11.6% to $27.7 billion, the largest deficit with any single country on record.