WASHINGTON — The U.S. services sector, which employs most Americans, recorded record growth in March as the easing of coronavirus restrictions released pent-up consumer demand.
The Institute for Supply Management, an association of purchasing managers, reported today that its nonmanufacturing index rose to an all-time high 63.7 last month from 55.3 in February. The old record of 60.9 was set in October 2018.
New orders also hit a record, and hiring and prices grew faster.
Anything above 50 signals growth, and the services sector is on a 10-month winning streak since rebounding from the economic impact of the pandemic last spring. The March reading was much higher than economists had expected. The rollout of vaccines is encouraging Americans to return to normal life — shopping and eating out — and President Joe Biden’s $1.9 trillion economic rescue plan is also likely to stimulate demand for services and juice economic growth.
“All the right pieces for a faster services recovery – expanded vaccine eligibility, reopenings, and historic fiscal expansion – are falling into place,” economists Oren Klachkin and Gregory Daco of Oxford Econmics wrote in a research note.
Although debate on economic policy often focuses on manufacturing, services — such as banks, retailers and restaurants — account for 71% of all U.S. jobs and 83% of private jobs.