US Economy: US Service Providers Weak

US service providers are getting weaker

The Purchasing Managers' Index for U.S. service providers fell again in March. Experts actually expected an increase.

Published: April 3, 2024, 5:10 pm

According to Helaba expert Ulrich Wortberg, despite the slowdown in the service sector, overall economic growth momentum is unlikely to weaken after a strong second half of 2023.

Image: Al Drago/Bloomberg

Growth in US service providers surprisingly weakened further in March. The Purchasing Managers' Index fell 1.2 points to 51.4 points, according to the ISM Institute's monthly survey released on Wednesday. This is the second decline in a row. However, experts polled by Reuters had expected a slight increase to 52.7 points. Growth limit is 50 points. US industrials exceeded this in March for the first time in a year and a half. The Purchasing Managers' Index rose 2.5 points last month to 50.3 points, so it is back on the growth track after a long decline.

According to Helaba expert Ulrich Wortberg, despite the slowdown in the service sector, the overall economic growth momentum is unlikely to weaken after the strong second half of 2023: “Expectations of interest rate cuts are unlikely to be postponed further with today's figures.”

The US Federal Reserve is trying to control inflation with high interest rate policy and at the same time avoid a deep recession. After some sharp hikes, it left the key interest rate at 5.25 to 5.5%. According to Cleveland Regional Reserve Bank President Loretta Mester, an interest rate cut could be on the agenda at the Fed's June meeting. However, economic data should also allow for this, he added. However, your Atlanta colleague Rafael Bostic doesn't expect a change in interest rates until the end of the year. Investors await further signs of the monetary policy course from FED Chairman Jerome Powell's speech at Stanford University in the US later in the evening (6:10 pm, CEST).

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US Economy: US Service Providers Weak | Finance and Economics

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