ISM: Service sector’s growth slows in March

Growth at U.S. non-manufacturing businesses slowed in March, the Institute for Supply Management reported today.
The ISM’s business activity index was at 54 percent last month, short of both February’s 54.3 percent and the 55 percent median forecast from a survey of 67 economists by Bloomberg News. The index had been at 54.3 percent in February, 59.0 percent in January and 56.7 percent in December.
The monthly Non-Manufacturing ISM Report On Business is based on a survey of purchasing and supply executives. An index of 50 is neutral; higher numbers indicate growth.
In the March survey, 30 percent of respondents said business had increased, 52 percent said it was steady and 18 percent said it decreased. The average for the past 12 months was 56.0 percent, the ISM said.
Sectors reporting growth last month were, in order: utilities; educational services; other services; retail trade; finance and insurance; transportation and warehousing; health care and social assistance; professional, scientific and technical services; public administration; and construction. Showing less activity than in February were management of companies and support services; accommodation and food services; information; and arts, entertainment and recreation.
“Non-manufacturing business activity increased for the 48th consecutive month in March,” said Anthony Nieves, chair of the ISM Non-Manufacturing Business Survey Committee and senior vice president for supply management at Hilton Hotels Corp. “Business Activity, New Orders and Employment increased at a slower rate in March than in February,” Nieves added. “The Prices Index increased 9.5 percentage points this month to 63.3 percent. Ten non-manufacturing industries reported increased activity in March. Members’ comments in March indicate a concern with fuel costs, the economy and the impact on business conditions. The overall indication in March is continued economic growth in the non-manufacturing sector, but at a slower pace than in February.”
New orders and employment activity in the sector also slowed slightly in March from February’s pace.
The new orders index was at 53.8 percent, compared with February’s 54.8 percent, January’s 55.4 percent and December’s 55.6 percent, the ISM said.
Employment in the non-manufacturing sector continued to grow, for the 32nd consecutive month, the ISM said. Its employment index stood at 50.8 percent last month, compared with February’s 52.2 percent, January’s 51.7 percent and December’s 53.2 percent.
Price increases were seen for many commodities, including hotel costs; airfare; car rentals and service; electricity; diesel fuel; gasoline, rising for the fifth month; heating oil; freight/shipping, rising for the third month; health care; paper, rising for the 38th month; and office supplies, the ISM said.
Additional information is available at www.ism.ws.