Growth in the U.S. services sector slowed at the end of the first quarter of the year, signaling that the largest contributor to the U.S. economy continues to trail industrial production, according to Bloomberg. On Tuesday, the Institute for Supply Management reported that its index of non-manufacturing business fell by 2.4 points in March to 57.3, disappointing economists who were expecting the index to remain almost unchanged. The gauge is still above the 50-point marker for growth, and remains above the 56.1 average reading for the five years to 2007 and the 52.9 average since the recovery began.
The report showed that the sub-index for new orders was little changed at 64.1, while the gauges of employment and prices paid dropped over a point each to 53.7 and 72.1, respectively. The decline was led by a drop of over seven points in the sub-index of business activity, which was 59.7 in March. Meanwhile, IHS Global Insight lowered their forecast for growth in the first half of 2011, revising their previous forecast of a 3.3% increase in gross domestic product down to 2.3%, citing disruptions in the global economy and rising food and energy prices.