The Markit Flash U.S. Services Purchasing Managers' Index (PMI) increased 5.3% from a four-month low to hit 55.5 for March, according to a Markit report (link opens as PDF) released today.
The "flash" estimate is typically based on approximately 85% to 90% of total PMI survey responses each month, and is designed to provide an accurate advance indication of the final PMI data. An above-50 reading denotes general growth, while below 50 signals contraction.
While the overall report is positive, this month's report sends mixed messages about the state of services. Even as top-line numbers improved from February, several problem spots still exist. Growth in new business slowed to 53.9 from February's 56.0 reading, and outstanding business slid 2.6 points into the red, to 48.3 points. Employment, an indicator of longer-term business confidence, stayed stuck at 51.9, an 11-month low.
Despite tough times for some components, business expectations for the next year actually improved at a stronger rate. From February's 73.4 reading, March expectations added on a solid 4.7 points to hit 78.1.
Markit Chief Economist Chris Williamson said in a statement today:
Service sector activity rebounded in March after a weather-torn February, but the survey is clearly flashing some warning lights as to whether the economy has lost some underlying momentum and that growth could slow in the second quarter. The question policymakers need the answer to is whether this weakness still reflects some weather impact. Companies certainly expect conditions to improve: firms' expectations about the year ahead picked up in March and are running above the average seen last year. Until a clearer picture emerges, it seems likely that policy stimulus will continue to be eased back.