US service sector expanded at much slower pace


Companies that employ 90 percent of the nation's work force still expanded for the 17th straight month. But their growth slowed considerable because of a sharp drop in demand for their services, the Institute for Supply Management said Wednesday.

The private trade group of purchasing executives said its index of service-sector activity dropped to 52.8 last month. That's down from 57.3 in March and a five-year high of 59.7 in February. Any reading over 50 indicates expansion.

The trade group measures activity for a range of industries, including retail, health care, financial services and construction. The index plummeted to 37.6 in November 2008, at the height of the financial crisis. The sector contracted for all but three months in 2009.

An index of new orders plummeted to its lowest level since December 2009. Many companies expressed concerns about rising gas and other commodity prices.

A measure of employment fell for the second straight month.

Paul Ashworth, an economist at Capital Economics, said the report suggests that economic growth will remain sluggish in the current April-June quarter. Growth slowed to a 1.8 percent pace in the first three months of this year.

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