The US service economy improved for a third consecutive month in March, as business activity rose to the highest level in six months, a sign the recovery was on firm footing after a temporary soft patch.
Markit Group’s flash US services PMI rose to 58.6 in March, up from 57.1 in February and the highest reading since September of last year. The flash estimate was well above the median estimate of economists calling for 57.0. The reading was also well above the survey average of 55.8.
A reading above 50 signifies expansion in service activity, whereas a reading below that level indicates contraction.
The PMI composite – a gauge of service and manufacturing activity – increased to 58.5 in March, up from 57.2 in February and the highest reading since September of last year. Earlier this week Markit said the US manufacturing sector rebounded to a five-month high in March, as new orders increased at a faster rate.
“The US economy is showing signs of regaining momentum after the slowdown seen at the turn of the year,” said Markit chief economist Chris Williamson in a statement. “The flash PMI surveys are registering faster growth of both service sector and factory activity at the end of the first quarter, as well as ongoing strong hiring.”
He added, “While the surveys signal that economic growth will have slowed in the first quarter from an already modest 2.2% pace seen in the final quarter of last year, the upturn in the surveys in March provides a clear advance indication that stronger.”
The Commerce Department will release its third and final estimate of fourth quarter GDP growth on Friday. Government economists are expected to increase their estimate of fourth quarter growth to 2.4 percent annually from the 2.2 percent reported last month.