ISM services survey shows economy expanding but pace slowed in March

The ISM survey of the br0ad-based service sector revealed that the lion’s share of the economy continues to expand, but the pace moderated from the first two months of the year.

The ISM Non-Manufacturing Index released by the Institute for Supply Management slowed from 59.7 in February to a still healthy 57.3 in March. A reading above 50 suggests the service sector is expanding.



The Business Activity/Production subcomponent took the biggest drop, falling from 66.9 in February to 59.7, but new orders, which are a good indication of future activity slipped just 0.3 points to a still strong 64.1.

It appears that some of the uncertainty earlier in the month caused by the spike in oil prices and possibly what’s going on in Japan may have played a role, however, the exports component of the survey did improve.

We're also seeing a bit of divergence from manufacturing, which continues to lead the expansion.



Next month should provide us with more clarity on the situation in Japan and how that might be impacting the U.S., but it is unlikely that the jump in crude and the situation overseas will threaten the U.S. recovery in my view.