The US services sector grew at a faster rate in March than in February and labor shortages saw some lessening; however, concerns remain, according to the Institute for Supply Management’s Services PMI report.
“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,” said Anthony Nieves, chair of the ISM’s Services Business Survey Committee. “Labor shortages have eased slightly as Covid-19 cases have declined and public-health restrictions have been relaxed.”
Nieves said geopolitical concerns — particularly the Russian invasion of Ukraine — have impacted materials costs, most notably fuel and chemical prices. And it has created uncertainty for many businesses.
Overall, the ISM’s Services PMI reached a reading of 58.3% in March, up from a reading of 56.5% in February — a 12-month low. Readings above 50.1% indicate expansion over time, and the average reading for the past 12 months was 62.3%.
The report noted employment activity in the services industry rebounded in March after contracting in February. Comments from executives in the report’s survey included “labor shortages seem to be improving as omicron has waned” and “hiring back to normal levels.”
ISM’s data is based on a survey of purchasing and supply chain executives across the US.