U.S. ISM nonmanufacturing index falls in March, but remains in line with strong growth

The U.S. ISM’s nonmanufacturing composite weakened slightly in March; however, it continued to be at levels in line with strong growth. The headline index dropped 3.6 points to 56.1, slightly below consensus expectations of 58. With the fall in March, the index is at the lower end of the elevated range that has prevailed since the start of 2017. Even with this fall, the outturn continues to be in line with strong growth in the non-manufacturing activity, noted Barclays in a research report.

Most of the major subcomponents moved widely consistent with the composite. The index of new orders dropped 6.2 points to a still-strong 59, coming off February’s very high reading, while the indices for business activity and new export orders dropped similar patterns. In the meantime, the employment index rose 0.7 points to 55.9, in line with strong payroll growth.

Indices that reflect production bottlenecks once again imply that issues with tight resource utilization have re-emerged after a lull at the turn of the year, with the order backlog and the index of supplier delivery delays both close to February’s higher levels. Inventory indicators imply that producers made little net change to their inventory position in March, while the indicator of inventory sentiment implies that nonmanufacturing producers are still viewing their positions as too high.

“Anecdotes in the press release suggest that respondents remain upbeat about domestic demand, but that resource pressures are again intensifying”, said Barclays.

At 19:00 GMT the FxWirePro's Hourly Strength Index of US Dollar was neutral at 15.512 more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex