US ISM Services data showed a decline in March to 54, compared to 54.9 expected and 56.1 in February. The prices index rose to 70.7 the highest level since the inflation-driven environment of 2022.
- Employment ISM came in at 45.1 vs 51 exp. and 51.8 previously which means a significant weakness and huge monthly decline
- Prices paid index surget to 70.7 vs 67 exp. and 63 previously and it's clearly a sign of inflationary pressure
- New orders came in at 60.6 vs 56.8 anticipated and 58.6 previously - supported partially by the defense industry
Source: xStation5
US ISM Summary
- Services sector remained in expansion, with ISM Services PMI at 54.0 in March (vs. 56.1 prior), marking the 21st consecutive month of growth, though momentum softened.
- Business activity slowed sharply, with the index dropping to 53.9 (from 59.9), the lowest level since September 2025.
- New orders strengthened, rising to 60.6 (highest since February 2023), signaling continued demand resilience.
- Employment deteriorated significantly, falling to 45.2 (from 51.8), marking the first contraction in four months and the weakest level since December 2023.
- Inflation pressures intensified, with the Prices Index surging to 70.7 (highest since October 2022), driven by higher oil and fuel costs.
- Supplier deliveries slowed further (56.2), reflecting ongoing supply chain frictions, partly linked to geopolitical tensions and logistics disruptions.
- External trade showed improvement, with both exports and imports expanding for a second consecutive month.
- Broad-based growth persisted, with 13 out of 16 industries expanding, although fewer than in the previous month.
- Geopolitical factors—particularly the Iran conflict—are increasingly impacting business conditions, contributing to higher input costs and precautionary inventory builds.
- Overall takeaway: the services sector remains resilient, but the mix of rising inflation, weakening employment, and slowing activity points to a more fragile macro backdrop.
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