The services sector barely grew in March

The services sector rebounded in March, but only a bit.

Markit Economics’ flash US services purchasing manager’s index (PMI) came in at 51. Economists had estimated that the index rose to 51.4 in March, after a slowdown to 49.7 in February.

The release noted that the improvement in activity was small, following weather-related disruptions in February.

The people Markit spoke to said their clients were still reluctant to commit to new projects. Volumes of new work rose at the slowest pace in the index’s almost-seven-year history.

In the release, Markit chief economist Chris Williamson said, “Worst may be to come. The greatest concern is the near-stalling of new business growth. Demand for goods and services is growing at the slowest rate seen this side of the global financial crisis. It’s not surprising therefore that companies lack pricing power, as reflected in a near-stagnation of average selling prices in recent months.”

Although Markit’s index dipped into contractionary territory in February — below 50 — ISM’s gauge of the sector has held above that mark.

But both showed that the services sector, which accounts for most of US economic output, had a sluggish start to the year.

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