The Institute
for Supply Management (ISM) reported on Wednesday that its Services PMI came in
at 51.4 per cent in March, recording a fall of 1.2 percentage points from an unrevised February reading of 52.6 per cent. The latest figure
indicated that the U.S. services sector expanded for the 15th successive month, albeit at a weaker
pace than in the previous two months.
Economists had forecast
the indicator to rise to 52.7 in March.
A reading above
50 signals expansion, while a reading below 50 indicates contraction.
Of the 18
services industries, 12 reported growth last with respondents indicating continuing improvement in
logistics and the supply chain and remaining employment challenges in a combination of difficulties in backfilling positions and/or controlling
labour expenses.
According to
the report, the Production index edged up 0.2 percentage point to 57.4 per cent in March, indicating
growth in output for the 46th month in a row. In addition, the Employment
measure increased by 0.5 percentage points to 48.5 per cent, indicating
employment activity in the services sector contracted in March for the second
straight month. Meanwhile, the New Orders gauge declined by 1.7 percentage
points to 54.4 per cent, indicating expansion for the 15th consecutive month. The
Inventories indicator dropped by 1.5 percentage points to 45.6 per cent,
indicating a shrinkage of inventories for the fourth successive month, and at a
faster rate in February. The Supplier Deliveries indicator plunged by 3.5 percentage points to 45.4 per cent, indicating faster
performance for the second consecutive month. The Backlog of Orders index tumbled 5.5
percentage points to 44.8 per cent, indicating a decrease in order backlogs in March
following two
consecutive months of expansion.
On the price front, the Prices index declined by 5.2
percentage points to 53.4 per cent, indicating that prices paid by services organizations for
materials and services increased in March for the 82nd month running.