US Services Sector Slows in March

The ISM Services PMI fell to 54 in March 2026 from 56.1 in February which was the highest since August 2022 and compared to forecasts of 55. The reading pointed to a slowdown in services activity, led by an ease in business activity (53.9 vs 59.9) and the first drop in employment in four months (45.2 vs 51.8). Also, the prices index rose to 70.7, the highest since October 2022 from 63 in February, amid higher oil and fuel costs and the supplier deliveries index indicated slower performance compared to February (56.2 vs 53.9), also unsurprisingly with shipping issues and flight disruptions due to the Middle East conflict and winter weather. Meanwhile, inventories (54.8 vs 56.4) and order backlogs (53.6 vs 55.9) eased while new orders rose faster (60.6 vs 58.6). "The predominant commentary this month was about impacts and adjustments due to the conflict with Iran and the expected flow through of higher oil prices at some point", Steve Miller, Chair of the ISM said.

The ISM Services PMI for the US climbed to 56.1 in February 2026 from 53.8 in January, beating market expectations of 53.5 and marking the fastest expansion in the sector since August 2022. Growth was driven by a sharp pickup in business activity, with the subindex rising to 59.9 from 57.4, its strongest reading since September 2024. New orders recorded the sharpest rise in 17 months (58.6 vs 53.1), while employment growth accelerated to its strongest level in a year (51.8 vs 50.3). The Supplier Deliveries Index slipped to 53.9 from 54.2, marking a 15th straight month above 50, which signals slower deliveries and solid demand. Meanwhile, the Prices Index fell to 63, its lowest since March 2025, though still above 60, indicating persistent cost pressures.

The ISM Services PMI for the US steadied at 53.8 in January 2026, the same as a downwardly revised 53.8 in December and better than forecasts of 53.5. The reading pointed to another robust expansion in the services sector, with a faster increase seen for business activity/production (57.4 vs 55.2) while new orders (53.1 vs 56.5), employment (50.3 vs 51.7) and supplier deliveries (54.2 vs 51.8) slowed. Inventories (45.1 vs 54.2) and backlog of orders (44 vs 42.6) remained in contraction but price pressures increased (66.6 vs 65.1). "There was more respondent commentary in January on tariff impacts and uncertainty, potentially the result of annual contract renewals and geopolitical tensions. Gasoline and diesel fuel continued to be cited as commodities down in price. With the highest Business Activity and Supplier Deliveries index readings since October 2024, whether pricing increases will stick or expand needs to be closely watched”, according to Steve Miller, Chair of the ISM.