Service industries expanded in March at the slowest pace in seven months and companies added fewer workers than forecast, indicating the U.S. economy is starting to cool.
The Institute for Supply Management said its non- manufacturing gauge declined to 54.4 from a one-year high of 56. The index was in line with its average over the past year. Private employment rose 158,000 last month, the smallest gain since October, according to the ADP Research Institute.
Slower growth in services, along with a report earlier this week that showed a decrease in the pace of manufacturing, underscores the risk to the economy from across-the-board cuts in the federal budget. At the same time, income gains and low borrowing costs may provide a buffer for retailers such as Macy’s Inc. (M), while a rebounding housing market benefits Realtors, builders and lenders.