Service Industries in U.S. Grow at Slowest Pace Since August

Service industries in the U.S. expanded in March at the slowest pace in seven months as new orders and employment cooled.

The Institute for Supply Management’s non-manufacturing index declined to 54.4 from a one-year high of 56 in February, a report from the Tempe, Arizona-based group showed today. The median forecast in a Bloomberg survey called for a drop to 55.5. A reading above 50 indicates expansion.

The figures follow a decrease in the group’s factory index and signal the economy may find it hard to accelerate this quarter in the face of across-the-board cuts in the federal budget. At the same time, job growth and low borrowing costs may underpin sales at auto dealers and retailers such as Macy’s Inc. (M), while a resurgent housing market benefits realtors, builders and lenders.

“It is a temporary pause after running at a pretty heady clip,” Brian Jones, a senior U.S. economist at Societe Generale in New York, said before the report. Jones, who projected the index would decline to 53.7, had the lowest forecast among economists in the Bloomberg survey. “Consumer spending is going to be fine. The economy will pick back up in the second half.”

Estimates of the 73 economists in the Bloomberg survey ranged from 53.7 to 56.5 for the index, which accounts for almost 90 percent of the economy and includes industries from utilities and retail to health care, housing and finance. Before today, the gauge averaged 53.6 since the recession ended in June 2009.


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Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell