ISM Shows Services Economy Growing At Slower Pace In March

The Institute for Supply Management is out with its latest report on the services economy.  The non-manufacturing data for the month of March 2012 showed that economic activity in the non-manufacturing sector posted its 27th consecutive month of gains.  The Non-Manufacturing ISM Report On Business was down 1.3 points from the February report with a reading of 56.0%.  This still represent growth, but Bloomberg had estimates pegged at 57.0 and Dow Jones had a consensus of 56.9 for March.

Today’s report shows continued growth, albeit at a slower pace than the prior month.  The Business Activity Index was down 3.7 points to 58.9% in March; and the New Orders Index fell by 2.4 points to 58.8%; and the Employment Index was actually up 1 full point to 56.7%.

Inflation hawks may be losing some of the argument here as the Prices Index fell by 4.5 points down to 63.9%.  That is still higher in prices, but at a slower rate.  It is interesting that the report noted that there remains a concern about cost pressures and the instability of fuel prices.

The NMI reported that 16 non-manufacturing industries reported growth in March and the comments from the respondents remained mostly optimistic about business conditions with a higher confidence level of businesses and consumers.

JON C. OGG