US services sector continues its trend of solid growth
US services sector growth weakened in March but continued its three-year long run of expansion, data released today showed.
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Business expectations dropped to the lowest level since December 2017, however, as firms highlighted concerns about global trade tensions, economic growth worries and intense competition.
The US services business activity index registered 55.3 in March, down from 56.0 in February, but still indicating solid growth, the latest survey from IHS Market showed today.
The sub-sectors covered by the survey exclude retail but include consumer, transport, information, communication, finance, insurance, real estate and business services.
New export business increased for the second month running, often linked to the acquisition of new clients, IHS Markit said. Companies were also helped by lower inflation rates keeping costs down.
Nevertheless, service providers expressed a lower degree of confidence towards the outlook for output over the coming 12 months in March.
The data came as the US and China prepared to re-engage in trade talks to end the tariff wars which have been hurting both countries’ economies and the global economy in general.
Chris Williamson, chief business economist at IHS Markit, said: “Business optimism about the year ahead is now the lowest for two and a half years, posing downside risks to growth in coming months.”
However, he said: “Another solid service sector performance helped offset a deteriorating trend in manufacturing to leave the PMI surveys indicative of robust economic growth in March.”
Read more: US manufacturing growth slows as trade tensions begin to take toll
IHS Markit also released figures that painted an overall picture of the US economy today. The composite purchasing managers’ index (PMI), which assesses both services and manufacturing, scored 54.6 in March. This was down from 55.5 in February but nonetheless indicating strong growth.
“The overall increase was driven by the service sector, with manufacturing firms registering only a marginal rise in output,” IHS Markit said.