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March 2022 Services PMI Comes In at 58.3%

April 5, 2022

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]

ISM® SERVICES SURVEY RESULTS AT A GLANCE

COMPARISON OF ISM® SERVICES AND ISM® MANUFACTURING SURVEYS

March 2022

Index

 Services PMI®

Manufacturing PMI®

Series

Index

Mar

Series

Index

Feb

Percent

Point

Change

Direction

 

Rate of

Change

 

Trend**

(Months)

Series

Index

Mar

Series

Index

Feb

Percent

Point

Change

Services PMI®

58.3

56.5

+1.8

Growing

Faster

22

57.1

58.6

-1.5

Business Activity/

Production

55.5

55.1

+0.4

Growing

Faster

22

54.5

58.5

-4.0

New Orders

60.1

56.1

+4.0

Growing

Faster

22

53.8

61.7

-7.9

Employment

54.0

48.5

+5.5

Growing

From Contracting

1

56.3

52.9

+3.4

Supplier Deliveries

63.4

66.2

-2.8

Slowing

Slower

34

65.4

66.1

-0.7

Inventories

51.7

50.8

+0.9

Growing

Faster

2

55.5

53.6

+1.9

Prices

83.8

83.1

+0.7

Increasing

Faster

58

87.1

75.6

+11.5

Backlog of Orders

64.5

64.2

+0.3

Growing

Faster

15

60.0

65.0

-5.0

New Export Orders

61.0

53.0

+8.0

Growing

Faster

2

53.2

57.1

-3.9

Imports

45.0

51.7

-6.7

Contracting

From Growing 

1

51.8

55.4

-3.6

Inventory Sentiment

40.2

55.3

-15.1

Too Low

From Too High

1

N/A

N/A

N/A

Customers' Inventories

N/A

N/A

N/A

N/A

N/A

N/A

34.1

31.8

+2.3

Overall Economy

Growing

Faster

22


 

Services Sector

Growing

Faster

22


 

Services ISM® Report On Business® data is seasonally adjusted for the Business Activity, New Orders, Employment and Prices indexes. Manufacturing ISM® Report On Business® data is seasonally adjusted for New Orders, Production, Employment and Inventories indexes.
**Number of months moving in current direction.

COMMODITIES REPORTED UP/DOWN IN PRICE, AND IN SHORT SUPPLY

Commodities Up in Price
Aluminum Products (4); Butter; Chicken (7); Corrugated Boxes; Copper; Diesel Fuel (16); Electrical Components (14); Electronic Components (4); Energy; Food Products; Freight (11); Fuel (15); Fuel Related Products; Gasoline (16); Gasoline Related Products; Labor (16); Labor — Temporary (2); Lumber (3); Metal Based Products; Natural Gas; Office and Computer Supplies; Oriented Strand Board (OSB) (2); Paper (2); Paper Products (4); Petroleum; Pharmaceuticals; Plastic Products (8); Polyvinyl Chloride (PVC) Products (7); Propane; Resin Based Products; Stainless Steel Products; Steel Products* (15); and Transportation Costs (2).

Commodities Down in Price
Beef; Nitrile Gloves; and Steel Products*.

Commodities in Short Supply
Appliances; Blood Collection Tubes (2); Chips; Computers and Peripherals (3); Construction Materials; Dialysate (2); Diesel; Electronic Components (4); Food Products; IV Tubing (2); Labor (8); Labor — Temporary; Needles and Syringes (3); Packaging; Paper Products; Plastic Pipe; Printers; Resin Based Products; and Steel Products.

Note: The number of consecutive months the commodity is listed is indicated after each item. *Indicates both up and down in price.

MARCH 2022 SERVICES INDEX SUMMARIES

Services PMI®
In March, the Services PMI® registered 58.3 percent, a 1.8-percentage point increase compared to the February reading of 56.5 percent. The 12-month average is 62.3 percent, which reflects consistently strong growth in the services sector. The March reading indicates the services sector grew for the 22nd consecutive month after two months of contraction and 122 months of growth before that. A reading above 50 percent indicates the services sector economy is generally expanding; below 50 percent indicates the services sector is generally contracting.

A Services PMI® above 50.1 percent, over time, generally indicates an expansion of the overall economy. Therefore, the March Services PMI® indicates expansion for a 22nd straight month following two months of contraction and a preceding period of 122 months of growth. Nieves says, "The past relationship between the Services PMI® and the overall economy indicates that the Services PMI® for March (58.3 percent) corresponds to a 3-percent increase in real gross domestic product (GDP) on an annualized basis."

SERVICES PMI® HISTORY

Month

Services PMI®

Month

Services PMI®

Mar 2022

58.3

Sep 2021

62.6

Feb 2022

56.5

Aug 2021

62.2

Jan 2022

59.9

Jul 2021

64.1

Dec 2021

62.3

Jun 2021

60.7

Nov 2021

68.4

May 2021

63.2

Oct 2021

66.7

Apr 2021

62.7

Average for 12 months – 62.3

High – 68.4

Low – 56.5

Business Activity
ISM®'s Business Activity Index registered 55.5 percent in March, an increase of 0.4 percentage point from the reading of 55.1 percent in February, indicating growth for the 22nd consecutive month. Comments from respondents include: "Customer demand high due to decreasing COVID-19 restrictions" and "Continued demand in the housing market driving sales for remodels and new home builds."

The 13 industries reporting an increase in business activity for the month of March — listed in order — are: Arts, Entertainment & Recreation; Educational Services; Wholesale Trade; Other Services; Utilities; Accommodation & Food Services; Information; Construction; Public Administration; Transportation & Warehousing; Finance & Insurance; Management of Companies & Support Services; and Professional, Scientific & Technical Services. The two industries reporting a decrease in business activity for the month of March are: Agriculture, Forestry, Fishing & Hunting; and Health Care & Social Assistance.

Business Activity

%Higher

%Same

%Lower

Index

Mar 2022

30.7

54.6

14.7

55.5

Feb 2022

24.4

59.3

16.3

55.1

Jan 2022

31.1

48.2

20.7

59.9

Dec 2021

34.5

56.1

9.4

68.3

New Orders
ISM®'s New Orders Index registered 60.1 percent, up 4 percentage points from the February reading of 56.1 percent. New orders grew for the 22nd consecutive month after two months of contraction and a preceding period of 128 months of expansion. Comments from respondents include: "Substantial increase in guest traffic over the last month" and "March and April bookings looking good."

Fifteen industries reported growth of new orders in March, in the following order: Arts, Entertainment & Recreation; Educational Services; Wholesale Trade; Management of Companies & Support Services; Real Estate, Rental & Leasing; Utilities; Mining; Other Services; Construction; Information; Accommodation & Food Services; Professional, Scientific & Technical Services; Finance & Insurance; Public Administration; and Transportation & Warehousing. The two industries reporting a decrease in new orders in March are: Agriculture, Forestry, Fishing & Hunting; and Health Care & Social Assistance.

New Orders

%Higher

%Same

%Lower

Index

Mar 2022

31.0

58.0

11.0

60.1

Feb 2022

28.4

57.5

14.1

56.1

Jan 2022

27.9

58.6

13.5

61.7

Dec 2021

30.8

54.5

14.7

62.1

Employment
Employment activity in the services sector grew in March after contracting in February. ISM®'s Services Employment Index registered 54 percent in March, up 5.5 percentage points from the reading of 48.5 percent registered in February. Comments from respondents include: "Labor shortages seem to be improving as omicron has waned" and "Hiring back to normal levels."

The 13 industries reporting an increase in employment in March — listed in order — are: Accommodation & Food Services; Arts, Entertainment & Recreation; Construction; Transportation & Warehousing; Real Estate, Rental & Leasing; Educational Services; Wholesale Trade; Retail Trade; Finance & Insurance; Professional, Scientific & Technical Services; Public Administration; Utilities; and Health Care & Social Assistance. The five industries that reported a reduction in employment in March are: Mining; Management of Companies & Support Services; Agriculture, Forestry, Fishing & Hunting; Other Services; and Information.

Employment

%Higher

%Same

%Lower

Index

Mar 2022

24.9

59.4

15.7

54.0

Feb 2022

19.4

54.9

25.7

48.5

Jan 2022

18.5

63.0

18.5

52.3

Dec 2021

30.1

47.9

22.0

54.7

Supplier Deliveries
The Supplier Deliveries Index registered 63.4 percent, down 2.8 percentage points from the 66.2 percent registered in February. A reading above 50 percent indicates slower deliveries, while a reading below 50 percent indicates faster deliveries. Comments from respondents include: "Significant number of back orders due to raw materials shortages and logistical challenges with ships and trucks" and "Suppliers are extending lead times due to material and labor shortages, as well as the resulting capacity shortfalls."

The 16 industries reporting slower deliveries in March — listed in order — are: Other Services; Retail Trade; Utilities; Educational Services; Information; Construction; Real Estate, Rental & Leasing; Mining; Public Administration; Transportation & Warehousing; Agriculture, Forestry, Fishing & Hunting; Management of Companies & Support Services; Health Care & Social Assistance; Wholesale Trade; Accommodation & Food Services; and Finance & Insurance. The only industry reporting faster supplier deliveries in March is Professional, Scientific & Technical Services.

Supplier Deliveries

%Slower

%Same

%Faster

Index

Mar 2022

32.7

61.4

5.9

63.4

Feb 2022

35.3

61.7

3.0

66.2

Jan 2022

36.1

59.3

4.6

65.7

Dec 2021

36.4

55.0

8.6

63.9

Inventories
The Inventories Index grew in March for the second consecutive month after eight preceding months of contraction. The reading of 51.7 percent was a 0.9-percentage point increase from the 50.8 percent reported in February. Of the total respondents in March, 46 percent indicated they do not have inventories or do not measure them. Comments from respondents include: "COVID-19 impact on products has us carrying more material" and "Lead times are increasing, so we are increasing stock to ensure we have adequate supply of critical and higher-usage items."

The eight industries reporting an increase in inventories in March — listed in order — are: Mining; Retail Trade; Arts, Entertainment & Recreation; Utilities; Educational Services; Accommodation & Food Services; Wholesale Trade; and Professional, Scientific & Technical Services. The three industries reporting a decrease in inventories in March are: Information; Agriculture, Forestry, Fishing & Hunting; and Health Care & Social Assistance. Seven industries indicated no change in inventories in March.

Inventories

%Higher

%Same

%Lower

Index

Mar 2022

23.1

57.1

19.8

51.7

Feb 2022

26.7

48.1

25.2

50.8

Jan 2022

15.3

68.2

16.5

49.4

Dec 2021

16.7

59.9

23.4

46.7

Prices
Prices paid by services organizations for materials and services increased in March for the 58th consecutive month, with the index registering 83.8 percent, 0.7 percentage point higher than the February figure of 83.1 percent. This is its second-highest reading ever, behind the seasonally adjusted figure of 83.9 percent registered in December 2021.

All 18 services industries reported an increase in prices paid during the month of March, in the following order: Construction; Management of Companies & Support Services; Mining; Transportation & Warehousing; Utilities; Agriculture, Forestry, Fishing & Hunting; Real Estate, Rental & Leasing; Information; Wholesale Trade; Arts, Entertainment & Recreation; Educational Services; Public Administration; Other Services; Retail Trade; Professional, Scientific & Technical Services; Accommodation & Food Services; Health Care & Social Assistance; and Finance & Insurance.

Prices

%Higher

%Same

%Lower

Index

Mar 2022

72.9

26.5

0.6

83.8

Feb 2022

63.8

35.7

0.5

83.1

Jan 2022

63.1

35.2

1.7

82.3

Dec 2021

57.4

41.1

1.5

83.9

NOTE: Commodities reported as up in price and down in price are listed in the commodities section of this report.

Backlog of Orders
The ISM® Services Backlog of Orders Index grew in March for the 15th consecutive month. The index registered 64.5 percent, a 0.3-percentage point increase compared to the February reading of 64.2 percent. Of the total respondents in March, 43 percent indicated they do not measure backlog of orders. Respondent comments include: "More back orders on supplies, especially plastic products" and "Higher backlog due to constraints in materials."

The 11 industries reporting an increase in order backlogs in March — listed in order — are: Real Estate, Rental & Leasing; Utilities; Construction; Management of Companies & Support Services; Retail Trade; Educational Services; Transportation & Warehousing; Professional, Scientific & Technical Services; Health Care & Social Assistance; Public Administration; and Wholesale Trade. The only industry that reported a decrease in backlogs in March is Arts, Entertainment & Recreation.

Backlog of Orders

%Higher

%Same

%Lower

Index

Mar 2022

33.1

62.9

4.0

64.5

Feb 2022

34.6

59.2

6.2

64.2

Jan 2022

26.7

61.5

11.8

57.4

Dec 2021

35.4

53.8

10.8

62.3

New Export Orders
Orders and requests for services and other non-manufacturing activities to be provided outside of the U.S. by domestically based companies grew in March for the second consecutive month after contracting in January for the first time in 12 months. The New Export Orders Index registered 61 percent, an 8-percentage point increase from the 53 percent reported in February. Of the total respondents in March, 75 percent indicated they do not perform, or do not separately measure, orders for work outside of the U.S.

The nine industries reporting an increase in new export orders in March — listed in order — are: Real Estate, Rental & Leasing; Utilities; Agriculture, Forestry, Fishing & Hunting; Arts, Entertainment & Recreation; Accommodation & Food Services; Wholesale Trade; Finance & Insurance; Information; and Transportation & Warehousing. The three industries reporting a decrease in new export orders in March are: Mining; Construction; and Educational Services. Six industries indicated no change in new export orders March.

New Export Orders

%Higher

%Same

%Lower

Index

Mar 2022

29.1

63.8

7.1

61.0

Feb 2022

10.2

85.5

4.3

53.0

Jan 2022

7.3

77.2

15.5

45.9

Dec 2021

33.5

56.1

10.4

61.5

Imports
The Imports Index contracted in March after five previous months of growth, registering 45 percent, down 6.7 percentage points from February's figure of 51.7 percent. Sixty-six percent of respondents reported that they do not use, or do not track the use of, imported materials.

The seven industries reporting an increase in imports for the month of March — listed in order — are: Public Administration; Utilities; Transportation & Warehousing; Accommodation & Food Services; Wholesale Trade; Information; and Professional, Scientific & Technical Services. The five industries that reported a decrease in imports in March are: Real Estate, Rental & Leasing; Mining; Agriculture, Forestry, Fishing & Hunting; Retail Trade; and Health Care & Social Assistance. Six industries reported no change in imports in March.

Imports

%Higher

%Same

%Lower

Index

Mar 2022

11.9

66.2

21.9

45.0

Feb 2022

11.1

81.1

7.8

51.7

Jan 2022

10.5

81.1

8.4

51.1

Dec 2021

20.6

69.7

9.7

55.5

Inventory Sentiment
The ISM® Services Inventory Sentiment Index contracted in March for the 11th time in the last 12 months, registering 40.2 percent, a 15.1-percentage point decrease from February's figure of 55.3 percent. This reading indicates that respondents feel their inventories are too low when correlated to business activity levels. The 15.1 percentage point decrease between February and March is the largest decrease recorded for the Inventory Sentiment Index since its inception in 1997.

The five industries reporting sentiment that their inventories were too high in March are: Arts, Entertainment & Recreation; Other Services; Educational Services; Health Care & Social Assistance; and Utilities. The eight industries reporting a feeling that their inventories were too low in March — listed in order — are: Real Estate, Rental & Leasing; Agriculture, Forestry, Fishing & Hunting; Accommodation & Food Services; Transportation & Warehousing; Construction; Wholesale Trade; Public Administration; and Professional, Scientific & Technical Services.

Inventory Sentiment

%Too

High

%About Right

%Too

Low

Index

Mar 2022

12.2

55.9

31.9

40.2

Feb 2022

28.7

53.2

18.1

55.3

Jan 2022

18.8

57.3

23.9

47.5

Dec 2021

11.5

53.7

34.8

38.3

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