New data from the Institute for Supply Management (ISM) showed U.S. service companies expanded last month, although at a slower pace than earlier in the year. The latest ISM service index was 56.5, down from a 56.9 in February. Any reading over 50 indicates expansion. “The majority of respondents’ comments reflect stability and are mostly positive about business conditions and the overall economy,” the ISM said.
Overall, 14 of 18 service industries reported growth in March, driven by hotels, restaurants, real estate and transportation. Only four sectors – mining, educational services, other services and utilities – reported contraction. Within service industries, the ISM’s new orders index rose to 57.8 in March from 56.7 in February. ISM’s export index, meanwhile, increased to 59 from 53, while its employment index nudged up to 56.6 from 56.4. Most economists view the data as a sign the economy will rebound in the second quarter, after a flat Q1.
ISM’s expansion figures are supported by financial data firm Markit, which reported its own service-sector composite increased to 59.2 in March from 57.1 in February – the highest reading in seven months. “The latest survey highlights a strong underlying pace of U.S. economic growth moving into the second quarter,” said Tim Moore, senior economist at Markit. “New business trends across the service sector have picked up especially sharply from the lows seen earlier in the year, and hiring has strengthened as a result.”