U.S. service providers experienced the fastest growth on record in March as measures of business activity and orders advanced to new highs.

The figures from the Institute for Supply Management on Monday underscore how looser business restrictions and increasing economic activity are igniting a rebound in sectors hardest hit by the pandemic and fueling job gains.

The ISM’s services index soared to 63.7 from a nine-month low of 55.3, when severe winter weather gripped much of the country and curtailed activity. Readings above 50 signal growth and the March figure, the strongest in data to 1997, exceeded the most optimistic projection in a Bloomberg survey of economists.

Service providers grew at a record pace in March as orders, activity surged

The report, covering the industries that make up almost 90 per cent of the economy, follows figures last week showing manufacturers expanded by the most since 1983.

Together, the data highlight accelerating economic growth as more Americans are vaccinated against the coronavirus, restrictions on business are rolled back and fiscal relief takes hold.

“There was a substantial increase in the rate of growth in the services sector in March,” Anthony Nieves, chair of the ISM Services Business Survey Committee, said in a statement. The lifting of pandemic-related restrictions “has released pent-up demand,” he said.

All of the 18 service industries in the ISM survey reported growth in March, led by entertainment and recreation, wholesale trade and mining.

The group’s measure of new orders increased in March to a record 67.2 from 51.9 a month earlier. The gauge of business activity, which parallels the ISM factory production index, jumped to 69.4, also the highest in data to 1997, from a February reading of 55.5.

Select ISM Industry Comments

“Residential new home construction demand continues to outpace supply. Building material delays, discontinuations and shortages are beginning to develop.” - Construction

“Logistics delays and uncertainty are creating significant problems with suppliers and inventories. Also, (there are) cost concerns regarding inflated pricing due to logistics and shortages.” - Accommodation & Food Services

“Vaccination rates are rising, and coronavirus infections are falling in the region, leading to optimistic outlooks and forecasts for increased business activity.” - Health Care

“Resin/oil price increases are beginning to filter down to products that we procure. In addition to price increases, we are also seeing longer lead times as supply chains pivot to find cheaper supply options.” - Information

“There are still delays in import shipments of goods, though (the situation has) slightly improved. The market forecast on ocean shipments and logistics is still the same for next quarter; improvements might be seen in Q3.” - Wholesale Trade

Consistent with the government’s latest payrolls report on Friday, which showed the economy added 916,000 jobs in March, the ISM’s employment index increased to the highest level since May 2019.

The services figures also showed prices paid for materials jumped to 74, the highest since July 2008, from 71.8 a month earlier. Delivery times also lengthened slightly. The group’s manufacturing report last week showed a supplier deliveries index at an almost 47-year high.