The expansion of the economic activities in the U.S. service sector slowed down in March and was below market expectation, an industry survey showed on Monday.
The Non-Manufacturing Index (NMI), which tracks activities in the U.S. service sector, registered 56.5 percent last month, 0.4 percentage point lower than February's reading, the Institute for Supply Management (ISM) said in its monthly survey.
The NMI survey covers all sectors outside of manufacturing. A reading above 50 percent indicates expansion of the service sector.
The new orders component of the index, a signal of future business, went up 1.1 percentage points to 57.8 percent. The component of employment edged up 0.2 percentage point from February to 56.6 percent, while the business activity index dropped to 57.5 percent in March.
The 14 industries tracked by the ISM reported growth while four reported contraction.
Despite the small drop in the PMI, the majority of the respondents' comments reflect stability and are mostly positive about business conditions and the overall economy, said the report.
The NMI index is closely watched because the service sector absorbs about 90 percent of the U.S. workforce, and is a key indicator for the overall health of the economic recovery.
The ISM is a non-profit educational association dedicated to advancing the practice of procurement and supply management.