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Expand chart
Data: FactSet; Chart: Danielle Alberti/Axios

The March reading of the ISM services index reached the highest level on record last month (with data going back to 1997), far outpacing economists' forecasts. At 63.7, it jumped more than eight points from the month before.

The big picture: Readings from business owners in the U.S. services sector now have joined the manufacturing sector in ebullience about the future, as stimulus checks hit bank accounts, vaccination rates rise and job growth returns.

Between the lines: "The details were just as strong as the headline," Lou Brien, economic strategist at DRW Trading, said in an email.

  • Business activity rose 14 points to a record high, new orders rose 15 points and employment increased 4.5 points.
  • And of course, business owners noted that the prices they paid for goods were rising, with the index for prices climbing to its highest since 2008 — a long-running theme of sentiment indexes this year.

What they're saying: "Respondents' comments indicate that the lifting of coronavirus (COVID-19) pandemic-related restrictions has released pent-up demand for many of their respective companies' services," Anthony Nieves, chair of ISM's services business survey committee, said in a release.

  • "Production-capacity constraints, material shortages, weather and challenges in logistics and human resources continue to cause supply chain disruption."

State of play: Analysts at Jefferies noted that their U.S. economic activity index rose last week to the highest level since March 14, 2020.

  • "Since bottoming on Jan 15, the index is up over 14 points," Jefferies money market economist Thomas Simons says in a note to clients.
  • "Consumer activity accounts for half of that increase, consistent with the lift from fiscal stimulus and the reopening. Our employment and movement composites have also increased meaningfully, as confirmed by March payrolls. Our real-time tracking points to extremely strong retails sales for March."

But, but, but: The recovery may not be such a good sign for stock prices, Deutsche Bank chief global strategist Binky Chadha says.

  • "Equities have historically traded closely with indicators of cyclical macro growth such as the ISMs (correlation 73%). Growth (ISM) typically peaks around a year (10-11 months) after recession ends, right at the point we would appear to be," he says in a note to clients.
  • "The S&P 500 sold off around growth peaks by a median -8.4%, but even episodes which saw the ISM flatten out rather than fall, saw a median -5.9% selloff."

Go deeper

Services sector sees greatest surge on record

Expand chart
Data: FactSet; Chart: Danielle Alberti/Axios

The U.S. services sector notched the fastest pace of growth on record last month, new data from a closely watched index shows.

Why it matters: It's another upbeat sign for the economic recovery.

Ben Geman, author of Generate
Apr 5, 2021 - Economy & Business

U.S. oil rig count climbs, signaling revival from pandemic lows

Expand chart
Data: Baker Hughes; Chart: Axios Visuals

The number of U.S. oil drilling rigs in operation last week climbed by 13 to reach 337, Baker Hughes data shows.

Why it matters: It's the highest in nearly a year and, as Reuters notes, the increase was the largest since January 2020.

Mike Allen, author of AM
3 hours ago - World

Courage vs. coddling with China

Peng Shuai of China serves during the China Open in Beijing in 2017. Photo: Andy Wong/AP

The women's professional tennis tour suspended tournaments in China Wednesday out of concern for Peng Shuai, on the same day that a top business voice made excuses for Beijing.

Why it matters: Ahead of February's Winter Olympics in Beijing, some sports figures are taking on the regime — while Big Business shrinks from confrontation with the world's second-largest economy.