Economic activity in the services sector grew in March for the 22nd month in a row and came in improved over February, according to the Institute for Supply Management.
The Services Purchasing Managers Index index registered 58.3%, a panel of purchasing and supply executives related in the institute’s latest Report On Business, where a reading over 50% represents growth. The February index reading was 56.5%.
Anthony Nieves, chair of ISM’s Services Business Survey Committee, in addressing the components of the overall reading, stated:
The Business Activity Index registered 55.5%, an increase of 0.4 percentage point compared to the reading of 55.1% in February, and the New Orders Index figure of 60.1% is four percentage points higher than the February reading of 56.1%. The Supplier Deliveries Index registered 63.4%, 2.8 percentage points lower than the 66.2% reported in February. 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.
The Prices Index registered 83.8%, up 0.7 percentage point from the February figure of 83.1% and its second-highest reading ever, behind December, 2021, 83.9%. Services businesses are continuing to replenish inventories, as the Inventories Index expanded for a second straight month: The reading of 51.7% is up 0.9-percentage point from February’s figure of 50.8%. The Inventory Sentiment Index, 40.2%, down 15.1 percentage points from February’s reading of 55.3%,returned to contraction in March, indicating that inventories are in ‘too low’ territory and not meeting current business requirements.
According to the Services PMI, 17 industries reported growth. Growth continues for the services sector, which has expanded for all but two of the last 146 months. There was an uptick in business activity in March, but respondents have indicated that they continue to be impacted by capacity constraints, logistical challenges and inflation. Labor shortages have eased slightly, as COVID-19 cases have declined and public-health restrictions have been relaxed. Geopolitical concerns — particularly the Russia/Ukraine war, which has impacted material costs, most notably fuel and chemical prices — have created uncertainty for many businesses.
The 17 services industries reporting growth in March, listed from the highest down, are: Educational Services, Arts, Entertainment & Recreation, Utilities, Construction, Wholesale Trade, Accommodation & Food Services, Other Services, Real Estate, Rental & Leasing, Information, Transportation & Warehousing, Public Administration, Retail Trade, Management of Companies & Support Services, Finance & Insurance, Professional, Scientific & Technical Services, Mining, and Health Care & Social Assistance. The only industry reporting a decrease in March was Agriculture, Forestry, Fishing & Hunting.
