District bank surveys for service sector remain in expansion

By Theresa Sheehan, Econoday Economist
May 2, 2022

All 5 Federal Reserve District Bank surveys for the service sector point to modest-to-moderate activity in April. Three of the five surveys had declines and two were higher, but all remained in expansion. The Dallas Fed’s business activity index dipped 2.4 points to 8.2, the Philadelphia general activity index was down 3.1 points to 29.3, and the Kansas City composite index was off 10 points to 20. The Richmond index for service sector revenues was up 4 points to 13 and the New York Fed’s business activity index rose 5.9 points to 24.2. On the whole, the changes are not more than the usual month-to-month sort of variation.

None of the regional indexes of service sector activity have a particularly strong correlation with the ISM service sector Index. The average of the five fares better as a hint as to the strength of the ISM measure with a correlation of 0.784. In April, the average dipped 1.1 point to 18.9, a small decline that leaves the reading reasonably stable for the past three months. The ISM service sector index rose a little under 2 points to 58.3 in March. The April average suggests that increase will be erased when the ISM report is released at 10:00 ET on Wednesday, May 4.