U.S. Services Index Falls to Nine-Month Low, Employment Drops

The U.S. service sector experienced a notable slowdown in March, with the Institute for Supply Management's Services Purchasing Managers' Index (PMI) dropping to 50.8, below expectations and marking the lowest level since June 2024. This decline was driven by a contraction in employment, which fell to 46.2, signaling the first decrease since September 2024. The new orders index also decreased, though business activity saw a modest increase. Meanwhile, a separate report indicated that the manufacturing sector also contracted, further highlighting economic challenges. Despite some positive signals from S&P Global's Services PMI, which rose to 54.4, analysts remain cautious about the overall economic outlook amidst concerns over tariffs and reduced governmental spending. The contrasting PMI results underscore the complexities of the current economic landscape, with growth expectations for Q2 being tempered.