U.S. Services Activity Growth Cooled in March — ISM

By Ed Frankl

Growth in the U.S. services industry lost a little steam in March, as demand and employment trends remained fragile in the sector, according to survey data released Wednesday.

The Institute for Supply Management's services-activity index fell to 51.4 in March from 52.6 in February, below expectations from economists who expected the index to edge up to 52.7 according to a poll compiled by The Wall Street Journal ahead of the release.

A reading above the no-change mark of 50 indicates expansion in the services sector, which has grown for the last 15 months, and 45 of the past 46, the ISM said.

Despite the cooling of the overall composite index, the component for business activity climbed 0.2 points to 57.4, though the index for new orders ticked down to 54.4 from 56.1 in February.

Elsewhere, the measure of employment contracted for the third time in four months, registering 48.5 from 48.0 in February. Supplier deliveries also were faster, indicating that customer demand--which typically drives up delivery times--has eased back.

While respondents described continuing improvement in logistics and the supply chain, employment challenges remain through difficulties in filling positions and controlling labor costs, said Anthony Nieves, chair of the ISM Services Business Survey Committee.

Twelve sub-industries ISM measures reported growth in March, while four reported decreases, it said.

Meanwhile, prices paid by services firms continued to grow in the month, but at a slower pace, suggesting some inflationary concerns could be easing.

"Our market is shaping up to be the first normal year since the start of Covid 19. Volumes were down in 2022 and 2023. A price correction was made last year, setting up sales to move back to historical volumes," said one respondent to the survey from the agricultural sector.

Write to Ed Frankl at edward.frankl@wsj.com

(END) Dow Jones Newswires

April 03, 2024 10:38 ET (14:38 GMT)

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