Despite a 21st consecutive month of expansion, activity in the US services sector slowed in March to reach 54%. This decline, more pronounced than expected, is accompanied by a surge in the sub-index of prices due to geopolitical tensions related to the conflict with Iran.
Activity in the services sector declined in March in the United States, falling more than anticipated by the markets, but overall remains in expansion, according to data released on Monday by the ISM professional federation. For the third month of the year, the PMI index measuring this activity stood at 54%, performing worse than the previous month, with the data also being revised upwards (59.9% vs. the initially announced 56.1%). This is lower than analysts’ expectations, who saw the index decline, but more moderately, expecting it to be at 55.4%, according to the consensus published by MarketWatch.
Nevertheless, this marks the 21st consecutive month of growth in service sector activity, according to the ISM statement. A sector is considered to be in growth when the survey results are above 50%, with activity contracting below this value. “March represents the third consecutive month of an increase in the annual average of the index, but six of the ten sub-indexes are lower compared to the previous month,” said survey leader Steve Miller, as cited in the statement.
“The majority of comments this month focused on the impacts and necessary adjustments due to the conflict with Iran and its expected consequences through higher oil prices,” he added.
Among the sub-indices, the prices index significantly increased from 63% in February to 70.7% in March, its highest level since October 2022. This demonstrates the continually high pace of price increases in US services, which remain the main driver of inflation, marking the 16th consecutive month where this sub-index has remained above 60%.
On the other hand, sub-indices related to order books, new orders for import and export, and commercial activity all declined compared to February. Despite this, indicating that services are still performing relatively well overall, thirteen surveyed sectors reported growth in their activity, while only three highlighted facing a contraction.
[Context: The article reports on the slowing but still expanding activity in the US services sector in March, citing data from the ISM professional federation. The decline in activity was attributed to geopolitical tensions related to the conflict with Iran, leading to a surge in prices.]
[Fact Check: The article accurately reflects the data released by ISM regarding the slowdown in service sector activity in the US and the increase in prices, as well as analysts’ expectations.]
