U.S. ISM Services Index Declines Sharply in March
by:Tom Moeller
|in:Economy in Brief
Summary
- Reading is lowest in three months and well below 2021 peak.
- Business activity, supplier delivery, new orders & employment fall.
- Prices index weakens greatly and is down sharply from 2021 high.
The U.S. ISM Services PMI fell to 51.2 during March from an unrevised 55.1 in February, according to the Institute for Supply Management. The downturn extended the weakening trend in place since its peak in November 2021. The Action Economics Forecast Survey expected a reading of 54.5 for March.
Haver Analytics constructs a composite index combining the services index and the manufacturing reading released on Monday. This index declined to 50.7 last month from 54.3 in February, but remained higher than 49.1 in December. These readings stand below a high of 66.9 in November 2021. The series dates back to July 1997.
During March, the business activity index declined to 55.4 from 56.3 in February, suggesting slower growth overall. The index remains below a 70.4 high in November 2021. A higher 26.8% (NSA) of respondents reported higher activity last month while a larger 16.3% reported a decline. The supplier delivery measure fell to 45.8 (NSA) from 47.6 in February. It was the lowest level since April 2009. A slightly increased 12.0% of respondents reported faster delivery speeds while a reduced 3.6% reported a slowdown. The new orders index fell to 52.2 after strengthening to 62.6 in February. The index stands below a record 69.2 in October 2021. A lessened 27.8% of respondents (NSA) reported more orders while an increased 21.7% reported a decline. The employment index also fell to 51.3 from 54.0 in February. A steady 21.7% of respondents (NSA) indicated higher employment and a lessened 16.8% reported a decline.
The prices index declined sharply to 59.5 from 65.6 in February. It was the lowest level since July 2020. The index remained below a record 84.5 in December 2021. A lessened 30.2% (NSA) of respondents reported price increases and 6.2% reported price declines.
In other categories not in the overall index, the new export orders index collapsed to 43.7 last month from 61.7 in February. The imports index also collapsed, to 43.6 in March after easing to 52.6 in the prior month. The backlog of orders index fell to 48.5, down from a high of 67.3 in October 2021. The inventory change index rose to 52.8 in March from 50.6, up from a recent low of 44.1 in July and nearly the highest level in two years. These series are not seasonally adjusted and not included in the ISM Services PMI total.
The ISM figures are available in Haver's USECON database, with additional detail in the SURVEYS database. The expectations figure from Action Economics is in the AS1REPNA database.
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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