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ISM Non-Manufacturing Index rose to 58.3% in March 2022
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Economic activity in the services sector grew in March for the 22nd month in a row — with the Services PMI® registering 58.3 percent — say the nation's purchasing and supply executives in the latest Services ISM® Report On Business®.
The report was issued today by Anthony Nieves, CPSM, C.P.M., A.P.P., CFPM, Chair of the Institute for Supply Management® (ISM®) Services Business Survey Committee: “In March, the Services PMI® registered 58.3 percent, 1.8 percentage points higher than February’s reading of 56.5 percent. The Business Activity Index registered 55.5 percent, an increase of 0.4 percentage point compared to the reading of 55.1 percent in February, and the New Orders Index figure of 60.1 percent is 4 percentage points higher than the February reading of 56.1 percent.
“The Supplier Deliveries Index registered 63.4 percent, 2.8 percentage points lower than the 66.2 percent reported in February. (Supplier Deliveries is the only ISM® Report On Business® index that is inversed; a reading of above 50 percent indicates slower deliveries, which is typical as the economy improves and customer demand increases.)
“The Prices Index registered 83.8 percent, up 0.7 percentage point from the February figure of 83.1 percent and its second-highest reading ever, behind December 2021 (83.9 percent). Services businesses are continuing to replenish inventories, as the Inventories Index expanded for a second straight month; the reading of 51.7 percent is up 0.9-percentage point from February’s figure of 50.8 percent. The Inventory Sentiment Index (40.2 percent, down 15.1 percentage points from February’s reading of 55.3 percent) returned to contraction in March, indicating that inventories are in ‘too low’ territory and not meeting current business requirements.”
Nieves continues, “According to the Services PMI®, 17 industries reported growth. The composite index indicated growth for the 22nd consecutive month after a two-month contraction in April and May 2020. Growth continues for the services sector, which has expanded for all but two of the last 146 months. There was an uptick in business activity in March, but respondents have indicated that they continue to be impacted by capacity constraints, logistical challenges and inflation. Labor shortages have eased slightly, as COVID-19 cases have declined and public-health restrictions have been relaxed. Geopolitical concerns — particularly the Russia/Ukraine war, which has impacted material costs, most notably fuel and chemical prices — have created uncertainty for many businesses.”
INDUSTRY PERFORMANCE
The 17 services industries reporting growth in March — listed in order — are: Educational Services; Arts, Entertainment & Recreation; Utilities; Construction; Wholesale Trade; Accommodation & Food Services; Other Services; Real Estate, Rental & Leasing; Information; Transportation & Warehousing; Public Administration; Retail Trade; Management of Companies & Support Services; Finance & Insurance; Professional, Scientific & Technical Services; Mining; and Health Care & Social Assistance. The only industry reporting a decrease in March is Agriculture, Forestry, Fishing & Hunting.
WHAT RESPONDENTS ARE SAYING
“Supply chain challenges continue at about the same levels as last month. Employment has improved as COVID-19 cases are declining. Restaurant sales have improved since Valentine’s Day, with mask and vaccine verification mandates being dropped.” [Accommodation & Food Services]
“Grain and fertilizer prices are near all-time highs, resulting in decreased purchasing.” [Agriculture, Forestry, Fishing & Hunting]
“Labor and inflation continue to push costs higher across the board for food and food-service supplies.” [Educational Services]
“Pricing pressures are stronger than ever due to the Russia-Ukraine [war], and energy costs are skyrocketing.” [Construction]
“Supply chain disruptions are still a problem due to reduced allocations and manufacturer back orders. Demand continues to outpace manufacturing capacity.” [Health Care & Social Assistance]
“Energy costs are putting a pinch on all suppliers. We have received many surcharge notices.” [Information]
“Concerns over inflation and rising energy prices are causing our company to take a cautious approach, especially related to planned capital expenditures.” [Management of Companies & Support Services]
“Long lead times for electronic components are becoming normal and expected. Chemical deliveries are often delayed due to a lack of qualified hazardous materials drivers.” [Public Administration]
“Global supply chain issues continue to disrupt chip supply, which is suppressing production of new vehicles.” [Retail Trade]
“We are still seeing raw material subcomponent shortages, transportation delays and price increases.” [Utilities]
“Constrained supply of many key product groups continues. Inflation worsening. Overall sales and profitability continue to be strong.” [Wholesale Trade]
Posted: April 5, 2022 Tuesday 10:00 AM