Despite a 21st consecutive month of expansion, the activity of services in the United States slowed down in March to stand at 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 services decreased in March in the United States, falling more than anticipated by the markets, but overall remains in expansion, according to data published on Monday by the professional federation ISM. For the third month of the year, the PMI index measuring this activity stood at 54%, performing worse than the previous month, with data also being revised upwards (59.9% compared to the initially announced 56.1%). This is lower than expected by analysts, who saw the index declining, 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 services activity, according to the ISM statement. A sector is considered to be in growth when the survey results above 50%, with activity contracting below this value. “March represents the third month of 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 have focused on the impacts and necessary adjustments due to the conflict with Iran and its expected consequences through higher oil prices,” he added.
Increase in prices
Among the sub-indices, the price index has significantly increased from 63% in February to 70.7% in March, its highest level since October 2022. This demonstrates the continued high pace of price increases in services in the United States, which remain the main driver of inflation, marking the 16th consecutive month during which this sub-index has remained above 60%.
Conversely, sub-indices related to order books, new orders in import-export, and commercial activity have all declined compared to February. Despite this, a total of thirteen sectors surveyed reported growth in their activity, while only three highlighted facing a contraction.
