The Institute for Supply Management (ISM) reported on Friday its non-manufacturing index (NMI) came in at 52.5 in March, which was 4.8 percentage points lower than the February reading of 57.3 percent. The March reading pointed to the slowest expansion in the services sector since August 2016.

Economists forecast the index to decrease to 44.0 last month. A reading above 50 signals expansion, while a reading below 50 indicates contraction.

Of the 18 manufacturing industries, 9 reported growth last month, the ISM said, adding that the respondents were concerned about the coronavirus impact on the supply chain, operational capacity, human resources and finances, as well as the ramifications for the overall economy.

According to the report, the ISM's non-manufacturing business activity measure fell to 48 percent, 9.8 percentage points lower than the February reading of 57.8 percent. That reflected contraction for the first time since July 2009. The new orders gauge came in at 52.9 percent, 10.2 percentage points below the reading of 63.1 percent in February. The Employment Index fell by 8.6 percentage points to 47 percent from the February reading of 55.6 percent. The Prices Index of 50 percent was 0.8 percentage point lower than the February reading of 50.8 percent, indicating that prices were unchanged in March. Meanwhile, the Supplier Deliveries Index registered 62.1 percent, up 9.7 percentage points from the February reading of 52.4 percent, and limited the drop in the composite NMI.

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 (52.5 percent) corresponds to a 1.4-percent increase in real gross domestic product (GDP) on an annualized basis."