The results of the Institute for Supply Management’s monthly survey of purchasing managers at U.S. non-manufacturing firms are out.
The survey’s headline Purchasing Managers Index (PMI) rose to 53.1 in March from February’s 51.6 reading — indicative of an acceleration in the pace of expansion in America’s services sector — but failed to meet Wall Street’s consensus forecast for a larger advance to 53.5.
The employment sub-index rose to 53.6 from February’s 47.5 reading, marking the biggest gain on record for the series as companies returned to hiring after last month’s reduction in headcount.
Index readings below 50 indicate varying degrees of contraction whereas readings above 50 indicate varying degrees of expansion. A 50 reading is neutral, implying no change from the previous month.
The ISM non-manufacturing employment sub-index is closely watched by traders because service industries account for around 80% of hiring in America, and economists use the number as an input into their forecasts for the official jobs report, which will be released by the U.S. Bureau of Labour Statistics tomorrow.
Below is what respondents to the survey are saying, from ISM’s release:
- “Outlook remains positive.” (Information)
- “Cold weather played more havoc on revenue, causing steep declines for nearly a week, and then picked up well beyond expectations. Overall, per capita spending increases, but frequency of visits are down; net neutral to slightly positive.” (Arts, Entertainment & Recreation)
- “Demand is rising; while at the same time there is pressure to reduce staffing expenses.” (Finance & Insurance)
- “Healthcare reform continues to adversely impact hospital projected/actual revenue.” (Health Care & Social Assistance)
- “Weather in Northeast — lost business days/business travel and site visits impacted. Energy costs rapidly increasing.” (Professional, Scientific & Technical Services)
- “Business was a little slower than expected due to harsh weather conditions across much of the country, but we expect a rebound as spring approaches.” (Retail Trade)
- “Economic environment continues to moderate slowly.” (Management of Companies & Support Services)
The results of a similar but less widely-tracked survey released by Markit this morning suggested American services-sector expansion decelerated slightly in March. Markit’s services PMI fell to 55.3 from February’s 55.5 reading. The employment sub-component index ticked down to 51.8 from 51.9.
“Service-sector business activity rebounded in March after being hit by the adverse weather, and companies have grown more upbeat about the outlook,” said Chris Williamson, chief economist at Markit, in a press release detailing the results of the survey. “But hiring remained disappointingly subdued, suggesting firms are reluctant to expand capacity until they see firm evidence of stronger demand feeding through to their businesses.”