The modest decline in the ISM non-manufacturing index to 56.5 in March, from 56.9, still leaves it at a level that has historically been consistent with GDP growth of about 3% annualised. The new orders index also increased to 57.8, from 56.7. The jump in the new export orders index to 59.0, from 53.0, suggests that increase in overall orders was driven by stronger demand from abroad. “The exports index is not seasonally adjusted, so we would be wary of drawing any conclusion, particularly when the stronger dollar appears to be weighing on the manufacturing sector.” – says Capital EconomicsMoreover, the employment index actually improved a little to 56.6 last month, from 56.4, putting it at a level that has historically been consistent with monthly gains in services payrolls of around 250,000. Based on this survey, rumours of the demise of the US economy have been greatly exaggerated.“It is possible that the ISM survey is too optimistic. But the further surge in the alternative national services PMI produced by Markit, to an eight-month high of 59.2 in March, from 58.6, supports the message that the US recovery is on a firm footing.” adds Capital Economics
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