Service firms grew at slightly slower pace in March

  • Associated Press
  • Monday, April 6, 2015 4:45pm
  • Business

WASHINGTON — U.S. service firms expanded at a slightly slower yet still healthy pace in March, an encouraging sign after multiple reports last week pointed to a slowing economy.

The Institute for Supply Management said Monday that its services index slipped to 56.5 last month, from 56.9 in February. Any reading over 50 indicates expansion.

A measure of sales fell last month and dragged down the overall index. But gauges of hiring and orders rose, evidence that services firms may see solid growth in the coming months.

That suggests that recent signs of a weakening economy could prove temporary. The services figures come after a disappointing jobs report last week, which echoed a slew of other weak economic data this month. Employers added just 126,000 jobs in March, the fewest in 15 months.

“Based on this survey, rumors of the demise of the US economy have been greatly exaggerated,” Paul Ashworth, chief U.S. economist at Capital Economics, said in a note to clients.

At the same time, service firms covered by the report, which include health care providers, hotels, restaurants, construction companies, and banks, are less affected by some of the trends which have held back manufacturing. Factory output has slowed partly because of a rapid rise in the value of the dollar, which makes goods exports more expensive.

Manufacturing firms were also hit by a labor dispute at ports in California, which delayed the shipping of needed parts and components.

Fourteen of 18 services industries reported growth in March, led by real estate, hotels and restaurants, and transportation and shipping.

Still, many analysts now forecast that the economy barely expanded in the first three months of this year. Growth has slowed dramatically in the last six months.

The ISM is a trade group of purchasing managers. Its survey of services firms covers businesses that employ 90 percent of the American workforce, including retail, construction, health care and financial services companies.

The ISM’s manufacturing index, released last week, fell for the fifth straight month in March. In addition to the strong dollar, factories have been held back by cheaper oil, which has hurt orders for steel pipe and other equipment.

Home construction has been weak despite low mortgage rates. And Americans are still cautious about spending, even with a sharp plunge in gas prices since last June.

Growth has faltered as a result. The economy expanded at a 2.2 percent annual rate in the final three months of last year, down sharply from a blistering 4.8 percent in the six months from last April through November.

Most analysts expect it slowed even further in the January-March quarter. Harsh winter weather may have been partly to blame. But paychecks are still barely keeping up with inflation, even as the unemployment rate has fallen. That is likely weighing on spending and growth.

Talk to us

> Give us your news tips.

> Send us a letter to the editor.

> More Herald contact information.

More in Business

Black Press Media operates Sound Publishing, the largest community news organization in Washington State with dailies and community news outlets in Alaska.
Black Press Media concludes transition of ownership

Black Press Media, which operates Sound Publishing, completed its sale Monday (March 25), following the formerly announced corporate restructuring.

Maygen Hetherington, executive director of the Historic Downtown Snohomish Association, laughs during an interview in her office on Thursday, Feb. 15, 2024, in Snohomish, Washington. (Ryan Berry / The Herald)
Maygen Hetherington: tireless advocate for the city of Snohomish

Historic Downtown Snohomish Association receives the Opportunity Lives Here award from Economic Alliance.

FILE - Washington Secretary of State Steve Hobbs poses in front of photos of the 15 people who previously held the office on Nov. 22, 2021, after he was sworn in at the Capitol in Olympia, Wash. Hobbs faces several challengers as he runs for election to the office he was appointed to last fall. (AP Photo/Ted S. Warren, File)
Secretary of State Steve Hobbs: ‘I wanted to serve my country’

Hobbs, a former Lake Stevens senator, is the recipient of the Henry M. Jackson Award from Economic Alliance Snohomish County.

Mark Duffy poses for a photo in his office at the Mountain Pacific Bank headquarters on Wednesday, Feb. 14, 2024 in Everett, Washington. (Annie Barker / The Herald)
Mark Duffy: Building a hometown bank; giving kids an opportunity

Mountain Pacific Bank’s founder is the recipient of the Fluke Award from Economic Alliance Snohomish County.

Barb Tolbert poses for a photo at Silver Scoop Ice Cream on Thursday, Feb. 29, 2024 in Arlington, Washington. (Annie Barker / The Herald)
Barb Tolbert: Former mayor piloted Arlington out of economic brink

Tolbert won the Elson S. Floyd Award, honoring a leader who has “created lasting opportunities” for the underserved.

Photo provided by 
Economic Alliance
Economic Alliance presented one of the Washington Rising Stem Awards to Katie Larios, a senior at Mountlake Terrace High School.
Mountlake Terrace High School senior wins state STEM award

Katie Larios was honored at an Economic Alliance gathering: “A champion for other young women of color in STEM.”

The Westwood Rainier is one of the seven ships in the Westwood line. The ships serve ports in the Pacific Northwest and Northeast Asia. (Photo provided by Swire Shipping)
Westwood Shipping Lines, an Everett mainstay, has new name

The four green-hulled Westwood vessels will keep their names, but the ships will display the Swire Shipping flag.

A Keyport ship docked at Lake Union in Seattle in June 2018. The ship spends most of the year in Alaska harvesting Golden King crab in the Bering Sea. During the summer it ties up for maintenance and repairs at Lake Union. (Keyport LLC)
In crabbers’ turbulent moment, Edmonds seafood processor ‘saved our season’

When a processing plant in Alaska closed, Edmonds-based business Keyport stepped up to solve a “no-win situation.”

Angela Harris, Executive Director of the Port of Edmonds, stands at the port’s marina on Wednesday, Jan. 24, 2024, in Edmonds, Washington. (Ryan Berry / The Herald)
Leadership, love for the Port of Edmonds got exec the job

Shoring up an aging seawall is the first order of business for Angela Harris, the first woman to lead the Edmonds port.

The Cascade Warbirds fly over Naval Station Everett. (Sue Misao / The Herald file)
Bothell High School senior awarded $2,500 to keep on flying

Cascade Warbirds scholarship helps students 16-21 continue flight training and earn a private pilot’s certificate.

Rachel Gardner, the owner of Musicology Co., a new music boutique record store on Thursday, Jan. 18, 2024 in Edmonds, Washington. Musicology Co. will open in February, selling used and new vinyl, CDs and other music-related merchandise. (Olivia Vanni / The Herald)
New Edmonds record shop intends to be a ‘destination for every musician’

Rachel Gardner opened Musicology Co. this month, filling a record store gap in Edmonds.

MyMyToyStore.com owner Tom Harrison at his brick and mortar storefront on Tuesday, Sept. 6, 2022 in Everett, Washington. (Olivia Vanni / The Herald)
Burst pipe permanently closes downtown Everett toy store

After a pipe flooded the store, MyMyToystore in downtown Everett closed. Owner Tom Harrison is already on to his next venture.

Support local journalism

If you value local news, make a gift now to support the trusted journalism you get in The Daily Herald. Donations processed in this system are not tax deductible.