WASHINGTON (AP) - U.S. service firms expanded at a slightly slower yet still healthy pace in March, an encouraging sign after multiple reports last week pointed to a slowing economy.
The Institute for Supply Management said Monday that its services index slipped to 56.5 last month, from 56.9 in February. Any reading over 50 indicates expansion.
A measure of sales fell last month and dragged down the overall index. But gauges of hiring and orders rose, evidence that services firms may see solid growth in the coming months.
That suggests that recent signs of a weakening economy could prove temporary. The services figures come after a disappointing jobs report last week, which echoed a slew of other weak economic data this month. Employers added just 126,000 jobs in March, the fewest in 15 months.
"Based on this survey, rumors of the demise of the US economy have been greatly exaggerated," Paul Ashworth, chief U.S. economist at Capital Economics, said in a note to clients.
At the same time, service firms covered by the report, which include health care providers, hotels, restaurants, construction companies, and banks, are less affected by some of the trends which have held back manufacturing. Factory output has slowed partly because of a rapid rise in the value of the dollar, which makes goods exports more expensive.
Manufacturing firms were also hit by a labor dispute at ports in California, which delayed the shipping of needed parts and components.
Fourteen of 18 services industries reported growth in March, led by real estate, hotels and restaurants, and transportation and shipping.
Still, many analysts now forecast that the economy barely expanded in the first three months of this year. Growth has slowed dramatically in the last six months.