March 2026 ISM® Services PMI® Reveals 54% Growth

The Services sector demonstrated continued growth in March 2026, according to the ISM® Services PMI® report. This report indicates that the Services PMI® reached 54%, marking the 21st consecutive month of expansion. However, this figure reflects a decline of 2.1 percentage points from February’s reading of 56.1%.

Key Indexes and Performance Metrics

• Business Activity Index: 53.9% (down from 59.9% in February)
• New Orders Index: 60.6% (up from 58.6% in February)
• Employment Index: 45.2% (down from 51.8% in February)
• Supplier Deliveries Index: 56.2% (up from 53.9% in February)
• Prices Index: 70.7% (up from 63% in February)

The March Services PMI® score of 54% is above the twelve-month average of 52.3%. This growth aligns with a consistent pattern reflecting an expanding economy, corresponding to a projected annualized GDP increase of approximately 1.9 percentage points.

Sector Analysis

Thirteen industries reported growth in March, including Wholesale Trade and Finance & Insurance. In contrast, three sectors faced contraction: Retail Trade, Agriculture, and Public Administration.

Employment Trends

March marked a significant shift in employment, as the Employment Index contracted to 45.2%, the lowest since late 2023. This contraction was unexpected given previous increases over the prior three months. Industries reporting reduced employment included Retail Trade and Real Estate.

Inflation and Price Indexes

Inflation pressures were evident with the Prices Index climbing to 70.7%, indicating ongoing increases in costs for materials and services. The rise reflects escalating oil and fuel prices influenced by geopolitical tensions.

Supply Chain Observations

The Supplier Deliveries Index suggests slower delivery performance, reflecting ongoing logistics challenges attributed to the conflict in the Middle East. Additionally, inventory levels remained a concern as companies stockpiled to counter supply chain disruptions.

Future Outlook

The findings suggest that while there are hurdles, including reduced employment rates and persistent inflation, the overall services sector remains resilient. Continued expansion in new orders and backlogs are positive indicators for economic momentum going into the second quarter of 2026.