The March U.S. Services Purchasing Managers' Index (PMI) from S&P Global came in at 54.4, just above the 54.3 forecast. The reading marks the 26th consecutive month of expansion and the fastest growth of the year so far.
From the latest press release, Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, said:
"March saw a welcome rebound in service sector business activity after a weak start to the year, with employment also returning to growth after a decline seen in February. However, the rate of expansion remains below that seen throughout the second half of last year. Combined with a weak manufacturing reading for March, the survey data point to GDP having risen at an annualized rate of just 1.5% in the first quarter, down sharply from the 2.4% rate seen at the end of last year.
"The focus turns to whether growth will also trend lower in the second quarter. In this respect, we note that some of the improvement in March reflected better weather, after adverse conditions dampened services activity in the first two months of the year at many companies. There’s a suggestion, therefore, that the expansion in March may exaggerate the true underlying growth momentum in the economy.
"This gloomier picture is supported by the PMI’s future activity index, which showed optimism edging lower again in March. Business sentiment is now the lowest since the end of 2022 barring only the heightened uncertainty seen ahead of last year’s Presidential election.
"Companies report heightened concerns and uncertainty around the impact of political change, ranging from DOGE related budget cutting to tariffs and the degree to which foreign demand may be affected by recent policy initiatives. Concerns have also risen in relation to costs, which rose in March at the fastest rate in nearly two years as firms across both services and manufacturing reported intensifying supplier-driven price hikes, fueled by tariffs."
Background on the S&P Global US Services PMI
The S&P Global US Services PMI™ measures the activity level of purchasing mangers in the services sector through a questionnaire of ~400 service sector companies. The sectors covered include consumer (excluding retail), transportation, information, communication, finance, insurance, real estate, and business services. The S&P Services PMI is a diffusion index, meaning that a reading above 50 indicates expansion in the sector compared to the previous month and a reading below 50 indicates contraction.
Here is a snapshot of the series since mid-2012.
