U.S. March ISM Services - Slower but far from weak, with inflationary pressure rising
March’s ISM services index of 54.0 is weaker than expected and down from February’s 56.1 which was the strongest since July 2022. However, March’s reading remains higher than in every month of 2025, contrasting the S and P services PMI, which on Friday was revised down to a below neutral 49.8 in March.
The ISM services composite breakdown showed increasing strength in new orders, at 60.6 from 58.6, reaching their highest since February 2023, but a sharp slowing in employment, to 45.2 from 51.3, contrasting a stronger than expected non-farm payroll.
Business activity at 53.9 from 59.9 was softer but delivery times at 56.2 from 53.9, were stronger and appear inflated by the situation in the Middle East.
Prices paid do not contribute to the composite but are delivering an inflationary warning in erasing to 70.7 from 63.0, reaching their highest level since a marching October 2022. Export and import indices also do not contribute to the composite. The former slipped back to 50.7 from a strong 57.2 but the latter at 55.2 from 51.8 was quite firm.
