ISM non-manufacturing index slips more than expected in March

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The U.S. services sector expanded at a slower pace in March as the non-manufacturing index fell to 56.1 from 59.7 in February, on a seasonally adjusted basis, the Institute for Supply Management reported Wednesday.

An index reading below 50 signals a slowing economy, while a level above 50 suggests expansion.

Economists polled by IFR Markets had expected a 58.0 level.

The prices paid index grew to 58.7 from 54.4, the employment index climbed to 55.9 from 55.2.

The business activity/production index dropped to 57.4 from 64.7, the new orders index was at 59.0, down from 65.2; backlog of orders increased to 56.5 from 55.5; new export orders slid to 52.5 from 55.0; inventories fell to 50.0 from 51.0; inventory sentiment gained to 62.5 from 59.0; the supplier deliveries index decreased to 52.0 from 53.5; and imports rose to 51.5 from 48.5.

Members' general comments on business in the month included:

  • "Labor is tight and in short supply." (Accommodation & Food Services)
  • "While we have a slowed down in residential service and install [area], we are still experiencing strength in the new commercial construction area." (Construction)
  • "Q1 revenue in total on plan or slightly above. Some products slightly below plan. Overall, good start to 2019." (Finance & Insurance)
  • "Supply expenses are up commensurately with business conditions as business activity has outpaced the budget on average four to six percent for our fiscal cycle that [began] 7/1/18." (Health Care & Social Assistance)
  • "There is a sense of relief in our industry with the temporary reprieve of the additional tariffs. As of now, we feel this will help us maintain competitive prices and steady margins over the next quarter." (Management of Companies & Support Services)
  • "Activity level held flat." (Mining)
  • "Initial surge in business at the beginning of the year has peaked and settled to a more stable level." (Professional, Scientific & Technical Services)
  • "Locally as construction grows, a shortage of available workers for the industry is occurring for future projects." (Public Administration)
  • "April is when our real busy season begins and it has arrived early this year, demand is quite strong." (Real Estate, Rental & Leasing)
  • "Labor, weather and regulatory issues have impacted operations." (Transportation & Warehousing)
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