US services sector growth cools slightly in March

NEW YORK, April 4, (AFP): The US services sector cooled slightly in March, but remained robust, not showing much effect — yet — from trade war fears that have rattled financial markets, according to an industry survey released Wednesday.

Despite the modest dip, the US services sector, a key driver of the world’s largest economy, “enjoyed another month of strong growth in March,” the Institute for Supply Management said in its monthly report.

“The majority of respondents remain positive about business conditions,” the report added.

Anthony Nieves, chair of ISM’s non-manufacturing survey committee, told reporters it was “too soon” to see significant impact from tit-for-tat tariffs announced but not implemented by the US and China.

“The markets move a lot on what is potential and emotional and not so much as to what we’re seeing with real activity,” he said.

ISM’s Non-Manufacturing Index fell to 58.8 percent last month, a decline of 0.7 points from the February level, which was itself a bit below the record January reading of 59.9 percent.

But the March reading remained well above the 50 percent benchmark that separates growth from contraction, and above the average for the past 12 months.

Among the three major components of the index, the employment index rose slightly from the prior month, while new orders and business activity showed slightly lower growth.

Nieves said some respondents expressed worries about tariffs announced by President Donald Trump and countermeasures threatened by China, but “at this point it’s more of psyche rather than what’s been implemented.” “There’s a cautiousness right now, people are putting things on hold, but it’s not reflected in this report as far as business activity and orders,” he said.

But some companies surveyed pointed to worrisome price spikes in materials after the tariff announcements — similar to their counterparts in the ISM manufacturing report released Monday.

“The unbelievable amount of market volatility in construction-related materials that started with lumber continues with the tariffs on steel and aluminum,” a construction company official said.

“Accurate, long-term planning has become incredibly difficult, as distributors that historically held costs for at least 30 days are now, in some cases, committing to only seven days, as prices can change drastically in that time.”