Economic activity in the non-manufacturing sector expanded in April, say the nation's purchasing and supply executives in the latest Non-Manufacturing ISM Report on Business. The Non-Manufacturing Index or NMI increased 2.4% to52%,indicating expansion within the non-manufacturing sector for the month of April 2008. This comes after three consecutive months of decline. Twelve non-manufacturing industries reported growth in April. The comments of the members are mixed and vary by industry. The inflationary pressures of rising energy and commodity prices are of major concern to the members.
Economists had expected the April index to come in at 49.3. Areading below 50 indicates contraction.So what do the present numbers indicate?When viewed alongside last week's rise in April factory orders you get a somewhat confused economic picture. On the one hand the services and factory indicators say that the economy is not as weak as it was perceived to be.On the other hand the housing slump continues , and along with the weakness in the financial sector, threatens to be a drag on economic growth in the coming quarters. Fed Chairman Bernanke warned Monday:' High rates of delinquency and foreclosure can have substantial spillover effects on the housing market, the financial markets, and the broader economy.' He added that a widespread decline in home prices is a relatively novel phenomenon, and lenders and loan servicers will have to devise new and flexible strategies to deal with the issue.Bernanke called on Congress to move quickly on legislation expanding the Federal Housing Administration and strengthening government sponsored motgage finance enterprises Fannie Mae and Freddie Mac. 'Finding ways to avoid preventable foreclosures is a legitimate and important concern of public policy,' he said.