Service Industry Reports Show Orders Easing, Still Strong

New orders remain strong but did ease in March, pulling down the services PMI to 54.0 for the month's final reading vs 54.1 at mid-month and noticeably lower than February's 55.9. But orders aside, output remained strong and hiring did accelerate in the month for the best showing since August last year. Prices, as in other anecdotal surveys, are accelerating with higher input costs increasingly being passed through to customers. Watch later this morning at 10:00 a.m. for the ISM's non-manufacturing report where readings have been running higher than this report.

...meanwhile...

Unusual strength eased a bit in March for ISM's non-manufacturing sample as the index came in near expectations at 58.8 vs 59.5 and 59.9 in the two prior months. Growth in new orders remains very strong though the index is now under 60, at 59.5, for the first time since December. A key positive, however, and one for the outlook on Friday's employment report is a 1.6 point rise in employment to 56.6 which is strong for this reading.

Capacity stress in this sample is evident with supplier deliveries lengthening very sharply, up 3.0 points to 58.5, and input prices up a half point to a very hot 61.5 for a third straight plus 60 showing.

This report, in distinction to the services PMI released earlier this morning, includes mining, which was the strongest of 17 sectors in the March report, and also construction which includes specific comments on tariff effects, that price volatility for construction-related materials including steel and aluminum are disrupting business plans.

The employment result is strong as is once again the breadth of this report, underscored by the industry score which shows 15 reporting monthly growth and only 2 reporting contraction.