ISM Non-Manufacturing Slows in March: Sector Remains Optimistic

By at 4 April, 2019, 9:51 am

by Raymond J. Keating-

The Institute for Supply Management (ISM) non-manufacturing index pointed to growth continuing in the services sector, but at a slower pace in March.

The index dropped by 3.6 percentage points, from 59.7 percent in February to 56.1 percent in March. Any measure above 50 percent means that the services sector is growing. And March marked the 110th consecutive month of expansion.

Anthony Nieves, Chair of the Institute for Supply Management Non-Manufacturing Business Survey Committee, noted, “The non-manufacturing sector’s growth cooled off in March after strong growth in February. Respondents remain mostly optimistic about overall business conditions and the economy. They still have underlying concerns about employment resources and capacity constraints.”

The index points to a slight slowdown in growth since late last year, and March’s 56.1 percent was the lowest monthly level registered over the past 12 months.

Trade stands out as an area with questions. New export orders came in 52.5 percent in March, which was off from 55 percent in February, and from 59.5 percent in December. Meanwhile, imports showed slow growth in March at 51.5 percent, which was an improvement from the contraction level of 48.5 percent in February and comparable to the 52 percent in January.

Finally, it is worth noting the Business Activity Index. At 57.4 percent, growth was still strong in March. However, it was off from recent months, for example, 64.7 percent in February, 59.7 percent in January, and 61.2 percent in December.

Combined with various signals that manufacturing growth has slowed, the concern regarding the economy right now is that the slowdown in economic growth that occurred in the fourth quarter of last year will persist in 2019.


Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

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