Economic Buzz: US services growth slows as costs surge and hiring drops

The US service sector continued to grow in March, but at a slower pace as hiring declined sharply and costs rose quickly.

Data from the Institute for Supply Management (ISM) showed that its measure of prices paid for services and materials jumped to 70.7 ? the highest level since October 2022. Any reading above 50 signals growth. The increase of 7.7 points from February was the biggest in nearly 14 years.

At the same time, the overall ISM services index fell by 2.1 points to 54, mainly due to weaker hiring and slower business activity.

Companies are facing rising costs, especially for energy and other inputs, partly because of the ongoing Iran war. The conflict has disrupted the Strait of Hormuz, an important route for oil and key supplies.

The uncertainty caused by the war is also making businesses more cautious. The ISM employment index dropped sharply by 6.6 points to 45.2, marking one of the steepest declines since the pandemic.

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