US service sector cooled slightly in March, ISM data shows

Activity in the US service sector cooled slightly in March, the results of a survey showed, but there was no indication of a broad slowdown in the economy nor in hiring, according to economists.

The ISM’s non-manufacturing purchasing manager’s index (PMI) slipped to a reading of 56.5 for March from a reading of 56.9 in the month before.

The consensus forecast was for a print of 56.6.

However, the gauge of new orders within the sector improved to 57.8 from 56.7.

A sub-index tracking employment conditions also rose, to 56.6 from 56.4 in February.

Meanwhile, the sub-index linked to new export orders reached a reading of 59 points, up from 53 in the prior month.

"Taken together, the report shows US service sector activity remained solid through the end of Q1. The three-month average reading of 56.7 reflects a deceleration from Q4 (57.4), but in our view, suggests the weather-related slowdown in Q1 was not as severe as the same period the prior year, when the non-manufacturing ISM registered 53.5," said Barclays' Jess Hurwitz following the report.

The prices-paid sub-index moved back into expansionary territory, reaching a reading of 52.4 in comparison to 49.7 in the month before.