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The key ISM March US services index soared to an all time high 63.7 vs 59.0 marks the tenth straight month of growth for the services sector which accounts for over 80% of the US GDP.  All 18 services industries reported growth with many getting supply chain disruptions bringing inflation risk.  

ISM Services MArch 2021 chart

Note this ISM report has only been out since 2008 with the ISM noting some of the sub-indexes could be estimated back to 1997 and this would still be the best reading of all time.

March 2021 ISM PMI Highlights

  • PMI Record high 63.7 (since 2008) Prior 55.3 New Orders Index rose to 67.2% from 51.9%.
  • Production Index jumped to 69.4% from 55.5%, all time high
  • Prices Index moved up to 74.0% from 71.8%. highest since 2008
  • Employment Index increased to 57.2% from 52.7%.
  • Backlog of Orders Index slipped to 50.2% from 55.2%.
  • New export orders 55.5 from 57.6 prior
  • New imports 50.7 from 50.5 prior
  • Supplier deliveries 61.0 from 60.8 prior
  • inventory change 54.0 from 58.9 prior
  • inventory sentiment 52.7 from 54.3 prior

ISM Services MArch 2021

Comments in the report:

"Logistics delays and uncertainty are creating significant problems with suppliers and inventories. Also, [there are] cost concerns regarding inflated pricing due to logistics and shortages." (Accommodation & Food Services)

"Our four Southern California locations are finally open after being closed for 12 months. We are currently experiencing severe supply chain and distribution disruptions related to multiple factors. Reopening of the California and New York movie theater markets [is] creating a surge in demand; also, manufacturers and a distributor partner are dealing with labor shortages." (Arts, Entertainment & Recreation)

"Residential new home construction demand continues to outpace supply. Building material delays, discontinuations and shortages are beginning to develop. Shipping delays at the L.A. and Long Beach ports have contributed to longer lead times. Cold weather in Texas has hurt several component manufacturers for building materials. We have encountered the 'perfect storm' for building material shortages and price increases." (Construction)

"There is optimism in higher education that Fall 2021 will be near normal with vaccinated students, employees and staff returning to their roles on campus." (Educational Services)

"Local and national outlook remains positive, despite return-to-work concerns [and] work-from-home-related issues/purchases." (Finance & Insurance)

"Vaccination rates are rising, and coronavirus [COVID-19] infections are falling in the region, leading to optimistic outlooks and forecasts for increased business activity. Patient census numbers are trending upward, mainly due to a better ratio of patients seeking elective procedures versus COVID-19 hospitalizations. However, revenues are still soft, indicating that a full rebound in business activity has not yet been realized." (Health Care & Social Assistance)

"Resin/oil price increases are beginning to filter down to products that we procure. In addition to price increases, we are also seeing longer lead times as supply chains pivot to find cheaper supply options." (Information)

"Lack of chemicals and the recent freeze in Texas has delayed some orders and is creating a micro [price] increases for certain products. Suppliers are using the short-term shortage to their advantage to raise rates." (Mining)

"Higher levels of demand related to additional business reopening, and increased activity related to vaccination distribution." (Professional, Scientific & Technical Services)

"Business is picking up as mandated restrictions seem to be easing and spring is right around the corner." (Real Estate, Rental & Leasing)

"Outlook remains cautiously optimistic for the second half of the year as businesses continue to open up and projects come online." (Retail Trade)

"Overall, there are still delays in import shipments of goods, though [the situation has] slightly improved. The market forecast on ocean shipments and logistics is still the same for next quarter; improvements might be seen in Q3. COVID-19 issues continue to impact demand and supply across the globe, and the new stimulus aid is expected to help the economy and lead to an increase in retail spending over the next few months." (Wholesale Trade)

Source: ISM

From The TradersCommunity News Desk

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