The U.S. services sector cratered in March.
The Institute for Supply Management’s (ISM) Services Purchasing Managers’ Index (PMI) declined to 51.2 in March, down from 55.1 in February. The reading was below the market forecast of 54.5, suggesting that the services sector is beginning to cool off.
According to the ISM Services PMI, business activity, new orders, and employment slowed. A backlog of orders also slipped into contraction mode.
Inventories expanded, while price pressures eased.
Despite the abysmal numbers, the majority of companies maintained a positive outlook on business conditions.
That said, the S&P Global Services PMI rose to 52.6, up from 50.6. But it did come in below the market estimate of 53.8.
All eyes will be on the US labor market on Friday.
Private sector payrolls rose 145,000 in March, down from 261,000 in February. This also came in below economists’ expectations of 200,000.
“Employers are pulling back from a year of strong hiring and pay growth, after a three-month plateau, is inching down,” said Nela Richardson, the chief economist at ADP, in a statement.
This comes after job openings fell below ten million for the first time in nearly two years.
The non-farm payrolls (NFP) report is expected to show 240,000 new jobs in March.
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