US ISM Services PMI declines to 51.4 in March vs. 52.7 expected

• US ISM Services PMI declined in March but held above 50.
• US Dollar Index stays in negative territory near 104.50.

Business activity in the US service sector continued to expand in March, albeit at a more moderate pace than in February, with the ISM Services PMI edging lower to 51.4 from 52.6. This reading came in below the market expectation of 52.7. 

Other details of the report showed that the Prices Paid Index, the inflation component, declined to 53.4 from 58.6, while the Employment Index recovered to 48.5 from 48.0, reflecting a continuing decrease in the sector’s payrolls. 

Assessing the survey’s findings, “the decrease in the rate of growth in March and the decline in the composite index is a result of slower new orders growth, faster supplier deliveries and a contraction in employment,” said Anthony Nieves, Chair of the Institute for Supply Management Services Business Survey Committee, and continued:

“The report continued to reflect growth month over month. Respondents indicated continuing improvement in logistics and the supply chain. Employment challenges remain a combination of difficulties in backfilling positions and/or controlling labor expenses.”

Market reaction

The US Dollar came under selling pressure with the immediate reaction to the PMI data. At the time of press, the US Dollar Index was down 0.25% on the day at 104.49.