US Service Sector accelerates in March


The US service sector accelerated in March thanks to stronger employment.

The Institute for Supply Management (ISM) reported that its service index rose to 53.1, up from 51.6 in February. This was slightly below analyst expectations of 53.5. This marks the 51st consecutive month of growth. A reading above 50 indicates the sector is expanding.

The New Orders Index rose to 53.4%, up from 51.3% February.

In February the ISM employment index plunged to 47.5 in February, down from a robust 56.4 in January. In March, the employment index rebounded to 53.6 to a healthy expansionary pace.

Despite the affects of weather of the respective businesses, the majority of respondents indicate that business condidtions are improving. The respondents also project better business activity and economic conditions as weather conditions continue to improve.

service sector investing

The Institute of Supply Management reported that 13 of the 18 non-manufacturing industries reported growth in March — listed in order — are: Agriculture, Forestry, Fishing & Hunting; Transportation & Warehousing; Construction; Utilities; Management of Companies & Support Services; Wholesale Trade; Finance & Insurance; Arts, Entertainment & Recreation; Accommodation & Food Services; Retail Trade; Public Administration; Information; and Professional, Scientific & Technical Services. The five industries reporting contraction in March are: Mining; Educational Services; Health Care & Social Assistance; Real Estate, Rental & Leasing; and Other Services.

Respondents of the survey said

  • "Cold weather played more havoc on revenue, causing steep declines for nearly a week, and then picked up well beyond expectations. Overall, per capita spending increases, but frequency of visits are down; net neutral to slightly positive." (Arts, Entertainment & Recreation)
  • "Demand is rising; while at the same time there is pressure to reduce staffing expenses." (Finance & Insurance)
  • "Healthcare reform continues to adversely impact hospital projected/actual revenue." (Health Care & Social Assistance)
  • "Weather in Northeast — lost business days/business travel and site visits impacted. Energy costs rapidly increasing." (Professional, Scientific & Technical Services)
  • "Business was a little slower than expected due to harsh weather conditions across much of the country, but we expect a rebound as spring approaches." (Retail Trade)
  • "Economic environment continues to moderate slowly." (Management of Companies & Support Services)
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About the Author: Chris Wang

Chris Wang


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