The Institute
for Supply Management (ISM) announced on Thursday that its Services PMI came in
at 50.8 per cent in March, registering a drop of 2.7 percentage points from an unrevised February reading of 53.5 per cent. The latest figure
indicated that economic activity in the U.S. services sector grew for the ninth
successive month in March albeit at the weakest pace in this sequence.
Economists had anticipated
the indicator to decrease to 53.0 in March.
A reading above
50 signals expansion, while a reading below 50 indicates contraction.
According to
the report, the Production index increased 1.5 percentage points to 55.9 per
cent last month,
suggesting continued expansion
in production across the services sector. Meanwhile, the New Orders gauge dropped
by 1.8 percentage points to 50.4 per cent, indicating new orders rose for the ninth
consecutive month. The Employment measure plunged by 7.7 percentage points to 46.2
per cent, implying employment activity in the services sector contracted in March
for the first time since September 2024. Elsewhere, the Supplier Deliveries
indicator fell 2.8 percentage points to 50.6 per cent, pointing to a
slower supplier performance for the fourth month in a row. The Inventories
indicator slipped 0.3 percentage point to 50.3 per cent but remained in
expansion territory for the second successive month. On the price front, the Prices index declined 1.7 percentage
points to 60.9 per cent, suggesting that prices paid by services organizations for materials and
services increased in March for the 94th month running.
Commenting on
the data, Steve Miller, Chair of the Institute for Supply Management (ISM) Services
Business Survey Committee, said that 10 industries reported growth in March, a
drop of four from the 14 industries reported in each of the previous two months.
He also noted that there has been a significant increase this month in the
number of respondents reporting cost increases due to tariff activity. “Despite
an increase in comments on tariff impacts and continuing concerns over
potential tariffs and declining governmental spending, there was a close
balance in near-term sentiment, between panellists with good outlooks and those
seeing or expecting declines,” Miller added.