US Service Sector Growth Slows While Input Prices Surge
The US services sector slowed in March as the ISM nonmanufacturing index fell to 54.0. Input prices climbed to a three-year high due to rising energy costs.
The service sector in the United States experienced a slowdown in growth during March, as input prices for businesses surged to their highest levels in nearly three and a half years. This cooling comes amid geopolitical tensions that are beginning to exert significant inflationary pressure on the broader economy. According to the Institute for Supply Management (ISM), the nonmanufacturing purchasing managers index (PMI) declined to 54.0 last month from 56.1 in February, falling short of the 54.9 reading anticipated by economists. Despite the dip, the sector remains in expansion territory, as any reading above 50 indicates growth for a segment that represents more than two-thirds of American economic activity.
The ongoing conflict involving Israel and Iran, now entering its second month, has significantly disrupted energy markets. Global prices for Brent Crude Oil have climbed by more than 50% since the start of the hostilities. This surge has filtered through to consumers, with the national average price for WT GASOLINE surpassing $4 per gallon for the first time in over three years. Economists expect the inflationary impact of the conflict to be reflected in the upcoming Consumer Price Index report, following an earlier rise in producer prices during February.
