Stock markets expanded their news rally, with the Dow and S&P 500 closing at new highs.
The report looks at activities in the sector, from industries such as entertainment and recreation, to real estate, construction and retail. In total, it accounts for a large part of the US economy: 88% of America’s gross domestic product, the largest measure of economic activity, according to the ISM.
For March, the group’s index jumped to the highest level ever recorded: 63.7, easily exceeding economists’ expectations.
The series of surveys began in 2008 (although the underlying data date from 1997), and the previous peak was in October 2018. Any indication above 50 means that the sector is expanding.
And this was the trend: March marked the tenth consecutive month of service growth, with the industry continuing to recover from the pandemic shock.
“It’s clearly a big increase in business,” said Paul Ashworth, chief economist at Capital Economics. “The penetration [Covid-19] the number of cases and the successful vaccination program allows the lifting of restrictions, at the same time with $ 1.9 trillion of Biden in additional tax incentives, loads revenue.
New orders, stocks and employment rose in March, and prices in the sector also rose at a faster pace.
The comments in the report, which are based on surveys conducted by purchasing managers, indicate the price growth deficit, Ashworth said.
But it may not be great news: “The comments also highlight growing problems with labor shortages, suggesting that rising inflation may not be as transient as many. [Federal Reserve] officials seem to believe it, “Ashworth said in a note to clients.
The Fed has repeatedly said it expects consumer price hikes over the summer as recharged demand unleashes, but that these price jumps will be temporary and pose no threat to the central bank’s ultra-low interest rates. At this point.
The stock rally
The US stock market gained momentum from positive data on services, and all three major stock market indices ended above.