The U.S. services sector expanded at a slower pace in March as the non-manufacturing business activity composite index was 56.0 in the month, compared to 57.3 in February, on a seasonally adjusted basis, the Institute for Supply Management reported Wednesday.

Economists polled by Thomson Reuters had expected a 57.0 level.

An index reading below 50 signals a slowing economy, while a level above 50 suggests expansion.

The prices paid index, closely watched for signs of inflation, slid to 63.9 from 68.4.

The employment index increased to 56.7 from 55.7.

The business activity-production index fell to 58.9 from 62.6, the new orders index was at 58.8, off from 61.2, and the backlog of orders dropped to 49.5 from 53.0. New export orders fell to 52.5 from 54.5, inventories rose to 54.0 from 53.5, and inventory sentiment declined to 58.5 from 61.5. The supplier deliveries index remained 49.5, and imports increased to 56.0 from 52.0.

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