The Institute for Supply Management’s Services PMI for March beat expectations today by 5.4 percentage points with a print of 63.7, an all-time high for the data point since records began in 2008 and the tenth consecutive month of growth within the services space.
The trade weighted dollar index (DXY) dropped slightly after this release, adding to its losses from earlier in the session, and in late morning trading was down about 0.45%.
As with the ISM Manufacturing PMI from last week, industries across the services sector are beginning to see a recovery in the US.
Survey correspondents have suggested the easing of coronavirus restrictions has meant that pent up consumer demand has finally allowed to filter through to the economy. Educational services are optimistic for a return to student campuses by the autumn months and the Health Care industry is reporting higher vaccination levels, with overall infection rates falling.
To support this positive outlook, New Orders registered an all-time high, measuring in at 67.2, whilst employment also saw a 4.5-point increase on February. It is not all plain sailing however, and the space must remain cautious. Price pressures are still a concern, with the price index measuring 2.2 points higher in March.
Survey participants are still citing supply chain shortages as a primary cause of these price pressures. This is particularly apparent within the wholesale trade and construction industries, which depend on goods being shipped long distances. There is a degree of optimism however, as survey participants anticipate a return of more favorable business conditions in Q3.
Overall, it appears as if the services space across the US is moving in the right direction. Pandemic recovery measures have begun to have positive implications for access to labor supply, and the expectation is that price pressures should diminish as the global economy begins to reopen.
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