The increase to 53.1 for the service-sector ISM is roughly in line with the 53.5 that was expected. The key takeaway from this report is the improvement in the employment component which climbed to 53.6 from 47.5.
Layoffs? Don’t Talk About Layoffs
- The employment component gave us a scare last month. Not only does a number below 50 signal layoffs, the 47.5 reported for February was the weakest number for this component since the economy was first emerging from the recession.
- The 53.6 reported for March tells us that the ugly number in February was a head-fake, perhaps attributable to the recurring villain in recent economic stories: bad weather
Activity Firming Across the Economy
- The improvement in the non-manufacturing ISM today echoes the pickup seen earlier this week with the March ISM manufacturing measure. In both instances the improvement was a shade weaker than expectations.
- Notably, the employment component for manufacturing slipped, although, as the bottom graph illustrates the manufacturing measure did not dive like the service sector measure last month.
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