US Services Sector Expands but Slows in March

The U.S. services sector expanded in March for the 21st consecutive month, but growth slowed amid surging input costs driven by the ongoing conflict with Iran, according to a report released Monday by the Institute for Supply Management.

The ISM's nonmanufacturing purchasing managers' index, or PMI, dipped 2.1 points to 54.0 from February's 56.1, marking the sector's weakest reading since May of the previous year. A figure above 50 signals expansion in the services industry, which comprises more than two-thirds of the nation's economic activity. The slowdown came as businesses reported heightened pressures from elevated energy prices and supply chain disruptions tied to the U.S.-Israel conflict with Iran, now in its second month.

The report's prices-paid index soared 7.7 points to 70.7, the highest since October 2022 and the largest monthly jump in nearly 14 years. Companies across industries cited sharp increases in fuel and diesel costs, with global oil prices rising more than 50 percent due to the near-closure of the Strait of Hormuz, a vital shipping route for oil and other goods. The national average retail gasoline price climbed above $4 per gallon for the first time in...