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The US ISM Non-Manufacturing report was released on Tuesday. The main index dropped to 41.8, the lowest on record but still above expectations. According to analysts at Wells Fargo, the index was “limit down” from supplier deliveries that saved the headline from an even steeper drop. 

Key Quotes: 

“The headline drop to “only” 41.8 in the non-manufacturing ISM was underpinned by the fact that supplier deliveries soared to 78.3 in March as the shutdowns made it hard to get deliveries.”

“This report is terrible; no one is sugar-coating that. But keep in mind the lockdowns are easing and there is pent-up demand out there for services.” 

“Looking at every recession in the past half century, consumer services spending never fell more than 1% peak-to-trough. It will fall much more than that this time, but the upshot is an unprecedented services rebound when that spending comes back online.”