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Dow Jones NewsApr 3, 2:26 PM UTC
MW U.S. economy slowed in March even before 'Liberation Day' tariffs, ISM finds
By Jeffry Bartash
ISM services index slips to 50.8% from 53.5%
The large service side of the economy grew in March at the slowest pace in nine months, reflecting government spending cuts and uncertainty among businesses spawned by U.S. tariffs.
The service index compiled by the Institute for Supply Management dropped to 50.8% in March from 53.5% in the prior month.
Any number above 50% signals expansion, but it's the lowest reading since a negative tally in June 2024.
The latest survey doesn't capture the impact of the newly announced Trump administration tariffs on the rest of the world. Economists warn trade wars could raise prices, slow hiring and depress the economy if they persist for lengthy periods.
Executives said they already seeing price pressures tied to trade tensions.
"There has been a significant increase this month in the number of respondents reporting cost increases due to tariff activity," said Steve Miller, chairman of the survey.
More than eight in 10 Americans are employed by service businesses such as retail, health care and technology.
Economists polled by the Wall Street Journal had forecast a reading of 52.9% in the overall ISM index.
Key details:
-- The new-orders index dropped 1.8 points to 50.4%.
-- The employment barometer sank 7.7 points to 46.2%, the lowest level in almost a year.
-- The prices paid index, a measure of inflation, fell 1.7 points to 60.9%. But it was still above its long-term average.
Big picture: The service side of the economy generates most U.S. growth and is less affected by tariffs, but costs are bound to rise as businesses try to find new sources of supply.
It's too early to tell just how much the trade wars will hurt the economy, however. Economists say it will depend on how long they last, but a recession can't be ruled out, some say.
Market reaction: The Dow Jones Industrial Average and S&P 500 sank in Thursday trades. Stocks have tumbled in the past weeks in response to the tariffs.
-Jeffry Bartash
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04-03-25 1026ET
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