PMI Survey Shows US Services Sector Hit First
The coronavirus crisis has impacted sales in every industry, but the hit to service providers seems to be showing up in the data earlier than for manufacturers, according to the largest private survey of purchasing managers in the United States. The Purchasing Managers Index (PMI) survey, conducted March 12-23, showed the largest decline in overall business activity since the monthly survey began in October 2009.
With social distancing measures taking effect and increasing numbers of states closing restaurants and retail operations, companies providing face-to-face services are seeing a sudden and near-complete drop in demand. The services index fell from 49.4 in February to 39.1 in March. Scores below 50 in this index indicate business decline.
The manufacturing PMI declined from 50.7 to 49.2, beating expectations. But, economists warned, the lower drop for manufacturers this month was likely due to longer delivery times for suppliers. The number of new orders for manufacturers fell at the highest level since 2009.
While service sector decline is more visible, manufacturers are facing drops in export orders and supply chain challenges. As additional data on unemployment claims and manufacturing activity are released later this month, the picture will become clearer.
Posted by: Chuck McShane, Senior Vice President Economic Research @ 2:00:00 pm