ISM: Service sector expands in March

The ISM Services Index registered 51.2%, 3.9 percentage points lower than February’s reading of 55.1%. The composite index indicated growth in March for the third consecutive month after a reading of 49.2% in December, the first contraction since May 2020 (45.4%).

“Thirteen industries reported growth in March. The Services PMI®, by being above 50 percent for a third month after a single month of contraction and a prior 30-month period of expansion, continues to indicate sustained growth for the sector. The composite index has indicated expansion for all but three of the previous 158 months.”

The Business Activity Index registered 55.4%, a 0.9-percentage point decrease compared to the reading of 56.3% in February.

The employment Index registered 51.3%, down 2.7 percentage points from the February figure of 54%. Comments from respondents include: “It continues to be difficult to maintain current positions and fill open positions” and “Hiring full-time employees to support business activities.”

The New Orders Index registered 52.2%, down substantially — 10.4 percentage points — from the February reading of 62.6%. The index indicated expansion for the third consecutive month after contracting in December, ending a string of 30 consecutive months of growth. Comments from respondents include: “Increased guest traffic over last month” and “Placing orders for the second half of year.”

The Supplier Deliveries Index registered 45.8%, 1.8 percentage points lower than the 47.6% recorded in February. In the last two months, the index has reflected the fastest supplier delivery performance since April 2009, when it registered 45.5%. (Supplier Deliveries is the only ISM® Report on Business® index that is inversed; a reading of above 50% indicates slower deliveries, which is typical as the economy improves and customer demand increases.)

Read the ISM release.