The ISM non-manufacturing survey results point to slowing conditions in the service sector of the economy in April. The composite index declined to 52.8 in April from 57.3 in March. This is the second monthly decline and the lowest since July 2010 (see Chart 1). The composite index is made up of four equally weighted components. Of the four components, supplier deliveries advanced in April (53.0 vs. 51.5), while indexes tracking new orders (52.7 vs. 64.1 in March), business activity (53.7 vs. 59.7 in March) and employment (51.9 vs. 53.7) declined.
The sum of the composite indexes of manufacturing and non-manufacturing (53.1) is the lowest since August 2010. (see Chart 2). The sum of the composite indexes tracks the year-to-year change in real GDP closely. The recent soft readings of these surveys suggest that real GDP growth could show a moderating trend in the second quarter of 2011.
Mortgage Purchase Applications for April Point to a Small Increase in Home Sales
For the week ended April 30, mortgage applications for purchases of homes rose 0.3% to 182.7. Mortgage purchase applications of homes rose 1.8% during the entire month of April following a 6.00% jump in the prior month. The recent monthly gain bodes positively for home sales, albeit a small increase is likely compared with the tally of home sales in March when new homes sales rose 11.1% and sales of existing homes advanced 3.1%.
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