The Institute for Supply Management (ISM) index related to the United States service sector recorded a drop from 56.1 in February to 54 in March 2026. Despite the decrease, the projection for the country’s economic growth remains positive, with an estimated expansion of the Gross Domestic Product (GDP) at 2.5% this year.
Regarding the index components, there was an increase in new orders in March, rising from 58.6 to 60.6, indicating robust demand in the sector. On the other hand, business activity showed a slowdown, with the index falling from 59.9 to 53.9 in the same month, suggesting greater caution on the part of companies given the economic scenario.
The employment component of the ISM showed a significant decrease, falling from 51.8 to 45.2 in March, below the neutral line of 50 that separates growth from contraction. The average of the last six months is also concerning, standing at 49.3, which confirms a trend of reduced job creation. Since January 2025, the average monthly generation of non-farm jobs has been only 20 thousand positions.
On the other hand, the service sector showed a net creation of 135 thousand jobs in March, which makes up most of the total 178 thousand new jobs for the month. This increase is mainly associated with the return of healthcare sector workers, returning to work after a strike. This dynamic contributes to maintaining employment growth, albeit at a slower pace.
Another rising indicator was the prices paid index for the sector, which increased from 63.0 in February to 70.7 in March, maintaining inflationary pressures in the industrial and service sectors. This rise in costs reflects an increase in the prices companies pay for raw materials and other inputs, being a sign of persistent inflation in production chains.
The data related to the consumer price index (CPI) suggest an increase from 2.4% in annual inflation to 3.4% in March, mainly due to the rise in gasoline prices. Mid- to long-term inflation expectations, calculated by the University of Michigan (UoM), are currently at 3.2%. If this level surpasses 3.5%, there are indications that the Federal Reserve (Fed, U.S. Central Bank) will adopt stricter measures to control inflation.
The Fed recognizes that monetary actions have limited effectiveness in the face of supply shocks, such as the escalation of oil prices. Therefore, the institution maintains continuous monitoring of inflation and employment indexes, especially considering the impact of the war in the Middle East and other global instabilities. This cautious stance aims to balance economic stability with external risks.
The drop in the ISM employment component reinforces concerns about the possibility of future job cuts. However, the March data indicate that the American economy continues to show resilience, even with the challenges associated with the international conflict. Monitoring ISM indicators is essential to track the trajectory of the U.S. economy and adjust policies as necessary.
Overall, recent numbers signal a slowdown in job creation and increased business caution. Still, the projected economic growth remains positive for 2026. The expectation is that these indicators will continue to be evaluated in the coming weeks, helping to define the Fed’s strategy in light of inflationary pressures and the labor market.
