The Institute for Supply Management (ISM) reported its non-manufacturing index (NMI) came in at 56.1 in March, which was 3.6 percentage points lower than the February reading of 59.7 percent. The March reading pointed to the weakest expansion in the services sector since August of 2017.

Economists forecast the index to decrease to 58.0 last month. A reading above 50 signals expansion, while a reading below 50 indicates contraction.

Of the 18 manufacturing industries, 16 reported growth last month, the ISM said.

According to the report, the ISM’s non-manufacturing business activity measure dropped to 57.4 percent, 7.3 percentage points lower than the February reading of 64.7 percent. That reflected growth for the 116th consecutive month, at a slower pace in March. The new orders gauge decreased to 59.0 percent, 6.2 percentage points lower than the reading of 65.2 percent in February. Meanwhile, the employment indicator rose 0.7 percentage point in March to 55.9 percent from the February reading of 55.2 percent. The Prices Index climbed 4.3 percentage points from the February reading of 54.4 percent to 58.7 percent, indicating that prices increased in March for the 22nd consecutive month.

Commenting on the data, the Chair of the ISM Non-Manufacturing Business Survey Committee, Anthony Nieves, noted, "The past relationship between the NMI and the overall economy indicates that the NMI for March (56.1 percent) corresponds to a 2.6-percent increase in real gross domestic product (GDP) on an annualized basis.”