U.S. Services Sector Keeps Strong Momentum in March -- IHS Markit

By Xavier Fontdegloria

Activity in the U.S. services sector continued to grow in March at a solid pace supported by upturns in output and new orders, data from IHS Markit showed Monday.

The final reading for the U.S. Services Purchasing Managers' Index for March was 60.4, up from 59.8 in February and above the flash estimate of 60.0. Economists polled by The Wall Street Journal expected the final services PMI to stand at 60.2.

The indicator marks the eighth consecutive monthly expansion for the service sector. The pace of growth is the fastest since July 2014, IHS Markit said.

The U.S. Services PMI is a survey-based measure of activity in industries such as communications, finances or consumer services. A level above 50 indicates expansion, while a reading below 50 signals contraction.

"The recent surge in service sector growth shows no sign of abating, with another impressive performance in March rounding off a quarter in which the PMI surveys indicate that the economy grew at an annualized rate of approximately 5%," said Chris Williamson, chief business economist at IHS Markit.

Contributing to the marked upturn in output was the fastest expansion in new business for six years, reflecting strengthening client demand. Firms attributed the expansion to greater spending by existing customers as well as the acquisition of new clients, the report said.

"While consumer demand is rising especially strongly for goods, the surveys are now also showing rising activity in the consumer services sector, linked to the vaccine roll out, looser virus containment measures and the fresh injection of stimulus in March," Mr. Williamson said.

Input costs soared in March, with the rate of inflation accelerating to the fastest since data collection for the services survey began in October 2009. Anecdotal evidence widely linked the uptick in costs to higher prices for key inputs such as paper, plastics, fuel and transportation, the report said.

Firms sought to pass on higher costs to clients through a sharper rise in selling prices, with the resulting rate of charge inflation being the quickest on record.

IHS Markit said the Composite PMI Index was 59.7 in March, up from 59.5 in February. This signals the fastest upturn in private sector business activity since August 2014.

Write to Xavier Fontdegloria at [e-mail]

(END) Dow Jones Newswires

04-05-21 1017ET