In March 2023, the service sector confidence index fell to 51.2, indicating modest expansion but recent volatility kept the risk level at yellow. Job growth continued with 236,000 jobs added, showing strength in the labor market despite inflation concerns, while the unemployment rate dropped to 3.5%. Consumer confidence saw a slight increase to 104.2, yet it marked a 13-month decline year-over-year, underlining ongoing economic risks despite signs of growth.

1. The Independent Market Observer
Economic Risk Factor Update
April 2023

2. Source: Institute for Supply Management, Haver Analytics
ISM Services: Services PMI Composite Index
SA, 50+ = Increasing
The Service
Sector
Risk
Level

3. The Service Sector continued
• Service sector confidence fell more than expected, with the
index dropping from 55.1 in February to 51.2 in March.
• This result left the index in expansionary territory for the third
month in a row after a surprise decline in December.
• We have left the risk level at yellow for now due to the recent
volatility in the index.
Risk
Level

4. Source: Bureau of Labor Statistics, Haver Analytics
All Employees: Total Nonfarm
% Change – Year to Year, SA
Private
Employment:
Annual
Change
Risk
Level

5. Private Employment: Annual Change continued
• 236,000 jobs were added in March, which was better than the
230,000 jobs that were projected.
• This marks 27 consecutive months of job growth, highlighting
the current strength of the labor market despite the
challenges created by inflation and the tight labor supply.
• The unemployment rate fell from 3.6% in February to 3.5%
in March.
Risk
Level

6. Source: Haver Analytics
Spread Between 10-Year U.S. Treasury and 3-Month U.S. Treasury
Yield Curve
(10-Year Minus
3-Month
Treasury Rates)
Risk
Level

7. Yield Curve (10-Year Minus 3-Month Treasury Rates)
continued
• The yield curve inversion deepened in March. The 3-month
Treasury yield fell from 4.88% at the end of February to 4.85% at
the end of March. The 10-year Treasury yield dropped from
3.92% to 3.48%.
• This now marks six consecutive months with an inverted
3-month 10-year yield curve. While this doesn’t guarantee that
the economy will enter a recession, it’s a widely monitored
technical signal that could indicate further slowdowns.
Risk
Level

8. Source: The Conference Board/Haver Analytics
Conference Board: Consumer Confidence
% Change – Year to Year SA, 1985=100
Consumer
Confidence:
Annual
Change
Risk
Level

9. Consumer Confidence: Annual Change continued
• Consumer confidence increased modestly from 103.4 in
February to 104.2 in March.
• On a year-over-year basis, confidence declined 3.16% during
the month, marking 13 consecutive months of declining
year-over-year confidence.
• While the year-over-year decline remains outside of the
historical danger zone, confidence remains well below the
pandemic-era highs.
Risk
Level

10. Conclusion: Risks Remain Despite Growth
• March showed continued economic growth despite inflation
worries and rising concerns surrounding the banking system.
• The strong hiring growth was an encouraging sign, as the job
market continues to signal a healthy economy.
• The sustained service sector confidence was a positive
development and will be a closely monitored indicator in the
months ahead.
• The path of recovery remains uncertain in the short term.
Risk
Level

11. Certain sections of this commentary contain forward-
looking statements that are based on our reasonable
expectations, estimates, projections, and assumptions.
Forward-looking statements are not guarantees of future
performance and involve certain risks and uncertainties,
which are difficult to predict. Past performance is not
indicative of future results.
Diversification does not assure a profit or protect against
loss in declining markets. All indices are unmanaged, and
investors cannot invest directly in an index.
The information contained herein is provided for
informational purposes only and is based upon sources
believed to be reliable. No guarantee is made as to the
completeness or accuracy of the information.
Disclosure