US services activity dips in March, alongside slower price gains, ISM says

3rd Apr 2024 15:48

(Sharecast News) - Activity levels in U.S. services failed to pick up last month as anticipated by economists, the results of a closely-followed survey showed.

The Institute for Supply Management's services sector Purchasing Managers' Index dipped to 51.4 for March after a reading of 52.6 in February.

Economists had forecast that the headline PMI would tick higher to 52.7.

Significantly, given financial markets' current focus on inflation, a sub-index tracking prices paid by companies fell back from 58.6 to 53.4.

Another key sub-index, that for new orders, slipped modestly from 56.1 to 54.4, while that linked to employment inched up from 48.0 to 48.5.

The 50 point level marked the threshold between a contraction and expansion both for the headline index as well as for all the subindices.

Following the survey's release, Stephen Brown, deputy chief North America economist at Capital Economics said: "The renewed fall in the ISM services index in March is consistent with the message from the hard data that economic growth is slowing from the unsustainably strong pace in the second half of last year.

"Moreover, the plunge in the prices paid index to the lowest level since the pandemic began, implies that core services ex-housing inflation, aka supercore, will resume falling back toward its pre-pandemic normal rate."