The US service economy expanded at a steady rate in March, as new orders and international business grew at a faster rate.
The Institute for Supply Management’s gauge of non-manufacturing PMI declined to 56.6 in March from 56.9 in February. The reading was in-line with the median estimate.
The US service economy has been above the 50 mark that separates expansion from contraction for 62 consecutive months. The March print suggests services output was rebounding gradually following a sharp slowdown at the end of last year.
A total of 14 non-manufacturing industries reported growth in March, led by management of companies and support services, real estate, and accommodation and food services. Four industries reported contraction last month, including mining, education and utilities.
Overall business activity eased slightly in March, as 13 industries reported growth. New orders expanded at a faster rate, while new export orders grew for a twelfth consecutive month and at a faster rate than in February.
The employment sub-index improved slightly in March, reflecting a slight increase in payrolls compared to February. The US economy added just 126,000 jobs last month, as inclement weather weighed on hiring. March was the slowest rate of hiring since December 2013, the Department of Labor reported on Friday. The unemployment rate was unchanged at 5.5% in March, official data showed.
Most respondents expressed optimism about the economic climate and said they expect to see business improve in the coming year.
“Current business conditions are positive and the outlook for 2015 is on track this quarter,” said a representative from the finance and insurance industry.
“See tremendous increase of business activities due to increase of capital investment, sales efforts and competition for human resources,” added another manager from professional, scientific and technical services.
Said another from retail trade: “Business slightly increasing year-over-year, but about the same as last month.”
The US economy is forecast to stall in the first quarter, mirroring the disastrous start to 2014. Gross domestic product is expected to rebound strongly in the second quarter, a sign that severe winter weather likely played a large role in Q1.
The Department of Commerce will release its first estimate of first quarter GDP growth on April 29. The “advance” estimate is subject to several revisions in the next two months.