-William Dudley, President of the New York Fed
The pace of business activity growth in the US services sector dropped in March to the lowest level in three months, whereas new export orders jumped to the highest in more than two years. According to the Institute for Supply Management, the non-manufacturing PMI declined to 56.5 in the reported period after the previous reading of 56.9 and compared with the market's expectations for 56.5. Nonetheless, the exports index climbed to 59.0 up from 53.0 in February to reach the highest reading since February 2013. The surge in the exports index came despite the greenback's advance versus a basket of major currencies of more than 20% since last May. The employment index also increased, rising to its highest level since last October, with the gauge coming in at 56.6 compared with 56.4 in February. Meanwhile, ISM's index of services sector business activity fell to 57.5 in March from 59.4 in February, marking the lowest reading in a year.
Meanwhile, the comprehensive gauge of the labour market health turned negative for the first time in almost three years. The Fed's labour market conditions index, a composite of 19 various indicators, declined to a negative 0.3 points in March, down from 2 points recorded in February. The reading hit the lowest level since June 2012. Three months earlier, the LMCI climbed to 7.1 points, a near-three-year high.
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