US services firms grew at a slower pace in March

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U.S. services firms expanded at a slower clip in March compared to the prior month, but growth levels still appear to be solid.

The Institute for Supply Management said Wednesday that its services index dropped to 58.8 from 59.5 in February. Any reading above 50 points toward growth. The services sector has been expanding for the past 98 months, or more than eight years.

The March index from the trade association of purchasing managers suggests that the robust pace of growth seen at the start of 2018 might be unsustainable. Measures of both business activity and new orders declined in March, but they were down from relatively high levels and still pointed to growth. The employment component of the index improved in March.

"It's still a strong reading, it just cooled off a bit," Anthony Nieves, chair of ISM's business survey committee for non-manufacturing companies, said about the drop in new orders.

The index is drawn from a survey of purchasing managers in the services industry, which includes finance, health care and retail and accounts for the majority of U.S. economic activity.

Of the industries surveyed, 15 reported expansion last month, including the transportation and lodging and food services. Just two industries — education and information services — contracted.