The U.S. services sector expanded in March although the non-manufacturing business activity composite index was 55.2 in the month, compared to 57.6 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 Thomson Reuters had expected a 57.0 level.

The prices paid index slipped to 53.5 from 57.7.

The employment index dropped to 51.6 from 55.2.

The business activity/production index fell to 58.9 from 63.6, the new orders index was at 58.9, off from 61.2; backlog of orders dipped to 53.0 from 54.0; new export orders jumped to 62.5 from 57.0; inventories declined to 48.5 from 52.0; inventory sentiment gained to 65.0 from 64.5; the supplier deliveries index grew to 51.5 from 50.5; and imports increased to 56.5 from 51.0.

Members' general comments on business in the month included:

  • "Growth on [a] number of projects has slowed a little, but revenue projections are steady." (Construction)
  • "The details of the revisions to the Obamacare program are of great interest to us. There is a large amount of future uncertainty with what will happen. Meanwhile, the business continues." (Finance & Insurance)
  • "Health care changes can affect our business. Uncertainty is making us hold on many projects." (Health Care & Social Assistance)
  • "Market conditions are still favorable with animal proteins due to [the] strong dollar, low exports and [an] abundant supply. Unknown [are] the POTUS' policies going forward on trade and immigration. Worker shortages have become a real problem in food production and produce growing areas." (Accommodation & Food Services)
  • "Business is picking up. Service labor is tight. New legislation has had significant impact." (Public Administration)
  • "Overall, business conditions are favorable, and the outlook is positive." (Retail Trade)
  • "Continued optimism regarding the domestic business environment." (Management of Companies & Support Services)
  • "First quarter has been brisk, and March has been as busy as I [have] ever seen, with many new endeavors." (Utilities)

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Gary Siegel

Gary Siegel

Gary Siegel has been at The Bond Buyer since 1989, currently covering economic indicators and the Federal Reserve system.