The ISM services index fell to 54 in March from 56.1, coming in below the estimate of 54.9. The Business Activity component dropped by six points to 53.9, the lowest since September, observes Peter Boockvar, editor of The Boock Report.
Higher energy prices, along with other inputs, took the Prices Paid line item to 70.7 from 63. That matches the highest since August 2022.
(Editor’s Note: Peter is speaking at our April 2026 MoneyShow Virtual Expo. Click HERE to register.)
ISM Services Prices Paid Index
New orders did rise by two points to 60.6, which is the highest since February 2023. I have to believe this is a result of companies wanting to front load ordering in light of what’s going on. To this, ISM quoted these company comments: “We are purchasing additional inventory to account for geopolitical issues” and “Stockpiling oil-derivative products in case the extended conflict in Iran or closure of the Strait of Hormuz cause supply issues.”
Of the 18 industries asked, 17 are paying higher prices with one seeing no change. This comes as the Supplier Deliveries index rose by 2.3 points to 56.2, the highest since October 2024. That reflects longer lead times and rising supply disruptions.
Put yourself in the shoes of a business owner. Your costs are going up all around you and what do you do in response? You likely hire less. The employment component declined by 6.6 points month-over-month to 45.2, the weakest print since December 2023.
Bottom line: Life throws curve balls. Everyone has a business plan until they get punched in the mouth, to paraphrase Mike Tyson. This again is one of those times.
