The U.S. services sector expanded at a faster pace in March as the non-manufacturing business activity composite index was 54.5 in the month, compared to 53.4 in February, on a seasonally adjusted basis, the Institute for Supply Management reported Tuesday.
An index reading below 50 signals a slowing economy, while a level above 50 suggests expansion.
Economists polled by Thomson Reuters had expected a 54.0 level.
The prices paid index increased to 49.1 from 45.5.
The employment index grew to 50.3 from 49.7.
The business activity/production index rose to 59.8 from 57.8, the new orders index was at 56.7, up from 55.5; backlog of orders held at 52.0; new export orders increased to 58.5 from 53.5; inventories remained at 52.5; inventory sentiment climbed to 62.5 from 62.0; the supplier deliveries index climbed to 51.0 from 50.5; and imports decreased to 53.0 from 55.5.
Members' general comments on business in the month included:
- “Nationally, business seems stronger than a year ago in Q1. Internal volume is better than expected and vendors report stronger Q1 than expected.” (Management of Companies & Support Services)
- “[Business] conditions are moving at a slow, but positive pace in this market. Expansion efforts are back on the horizon for late 2016.” (Finance & Insurance)
- “Macroeconomics, the world oil glut, Fed interest rates, foreign currencies in trouble, the slowing Chinese economy and a strong dollar will continue to place pressure on U.S. exports, especially food commodities. These situations have created lower domestic wholesale prices and lower hotel COGS [Cost of Goods Sold]; a win for us.” (Accommodation & Food Services)
- “Stability/dependability of revenue sources and cost of healthcare continue to be drivers in government revenues and expenditures.” (Public Administration)
- “Similar to last month, our company continues to look for ways to invest in lowering prices to attract cost-conscious consumers in a highly competitive grocery retail environment.” (Retail Trade)
- “No new business, but existing business is up 5 percent month-over-month and 40 percent year-over-year, especially in our e-commerce fulfillment services. Subsequent purchasing is relatively flat as productivity improvements are creating more capacity with less incremental cost.” (Transportation & Warehousing)
- “Lower volumes than expected at the start of the year.” (Arts, Entertainment & Recreation)
- “Business remains the same with an increase in hiring.” (Information)
