U.S. Services Index Indicates Slower Growth In March

(RTTNews) - The Institute for Supply Management released a report on Monday showing a slowdown in the pace of growth by U.S. service sector activity in the month of March.

The ISM said its services PMI slid to 54.0 in March after jumping to 56.1 in February, although a reading above 50 still indicates growth. Economists had expected the index to drop to 54.7.

The bigger than expected pullback by the headline index partly reflected a downturn in employment, as the employment index tumbled to 45.2 in March from 51.8 in February.

The report also showed a notable slowdown in the pace of growth by business activity, with the business activity index slumping to 53.9 in March from 59.9 in February.

Meanwhile, the ISM said the new orders index climbed to 60.6 in March from 58.6 in February, reaching its highest level since February 2023.

The prices index also surged to 70.7 in March from 63.0 in February, jumping to its highest reading since October 2022.

"The predominant commentary this month was about impacts and adjustments due to the conflict with Iran and the expected flow through of higher oil prices at some point," said Steve Miller, Chair of the ISM Services Business Survey Committee.

He added, "Companies across many industries reported seeing higher gas and diesel pricing, and inventories of multiple goods increased to withstand supply chain disruptions or short-term oil price impacts."

A separate report released by the ISM last Wednesday unexpectedly showed slightly faster growth in U.S. manufacturing activity in the month of March.

The ISM said its manufacturing PMI inched up to 52.7 in March from 52.4 in February, with a reading above 50 indicating growth. Economists had expected the index to edge down to 52.3.