Chart of the Week – Boom Time
ISM Services PMI hit a record in March. When combined with March’s payroll report, data suggests the service economy is about to boom.
Services account for about 86% of private output in the U.S., making them vital to economic growth. Consumers have a growing ability to spend in this part of the economy because of fewer COVID-19-related restrictions and an economic re-opening. In addition, over the past year, accumulated savings has grown $2 trillion above what past trendline savings rates would suggest. Adding pent-up demand, high savings, service economy re-opening equals a growth surge, in our view.
ISM Services PMI
Source: Institute For Supply Management, Bloomberg, Ivy Investments. Dates shown are July, 1997 through March, 2021. The ISM Services index is an economic index based on surveys of services firms’ purchasing and supply executives. Index readings above 50 suggests expansion in business activity, while index readings below 50 suggests contraction in business activity. This chart is being provided as a general source of information for education purposes only, and is not intended as a recommendation to purchase, sell or hold any specific security or to engage in any investment strategy.