US ISM Services PMI dropped sharply from 53.5 to 50.8 in March, falling well short of expectations (53.1).
While business activity improved to 55.9, the gain was overshadowed by deteriorating demand and labor market conditions. New orders fell from 52.2 to 50.4, barely holding above stagnation. Employment index plunged from 53.9 to 46.2—marking the first contraction since September 2024.
The steep drop in services employment is particularly concerning, as it may signal deeper caution among businesses in the face of growing uncertainty over trade and the broader economic outlook.
Meanwhile, prices paid for services eased slightly, with the index slipping from 62.6 to 60.9, though still reflecting elevated inflationary pressures in the sector.
According to ISM’s historical correlations, the March reading aligns with an annualized GDP growth rate of just 0.7%.
. While business activity improved to 55.9, the gain was overshadowed by deteriorating demand and labor market conditions. New orders fell from 52.2 to 50.4, barely holding above stagnation. Employment index plunged from 53.9 to 46.2—marking the first contraction since September 2024.){kind=link}