According to the Institute for Supply Management’s latest service report, economic activity in the services sector expanded in March for the third consecutive month, as the Services PMI registered 51.2%. The sector has grown in 33 of the last 34 months, with the lone contraction during that span in December.

“In March, the Services PMI registered 51.2%, 3.9 percentage points lower than February’s reading of 55.1%,” Anthony Nieves, chair of the ISM’s services business survey committee, said. “The composite index indicated growth in March for the third consecutive month after a reading of 49.2% in December, the first contraction since May 2020 (45.4%). The Business Activity Index registered 55.4%, a 0.9-percentage point decrease compared to the reading of 56.3% in February. The New Orders Index expanded in March for the third consecutive month after contracting in December for the first time since May 2020; the figure of 52.2% is 10.4 percentage points lower than the February reading of 62.6%.

“The Supplier Deliveries registered 45.8%, 1.8 percentage points lower than the 47.6% recorded in February. In the last two months, the index has reflected the fastest supplier delivery performance since April 2009, when it registered 45.5%. (Supplier Deliveries is the only ISM Report on Business index that is inversed; a reading of above 50% indicates slower deliveries, which is typical as the economy improves and customer demand increases.)

“The Prices Index was down 6.1 percentage points in March to 59.5%. The Inventories Index grew in March for the second consecutive month after contracting for eight months in a row. The reading of 52.8% is up 2.2 percentage points from February’s figure of 50.6%. The Inventory Sentiment Index (57.9%, up 2.6 percentage points from February’s reading of 55.3%) expanded for the fourth consecutive month after a four-month period of contraction.

“Thirteen industries reported growth in March. The Services PMI, by being above 50% for a third month after a single month of contraction and a prior 30-month period of expansion, continues to indicate sustained growth for the sector. The composite index has indicated expansion for all but three of the previous 158 months.”

“There has been a pullback in the rate of growth for the services sector, attributed mainly to (1) a cooling off in the new orders growth rate, (2) an employment environment that varies by industry and (3) continued improvements in capacity and logistics, a positive impact on supplier performance. The majority of respondents report a positive outlook on business conditions.”