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Markit: US service activity growth rebounds in March

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Markit: US service activity growth rebounds in March

But new orders rise at slowest pace for a year-and-a-half.

While US service activity grew during March, there are worrisome signs on the horizon.

According to market technology provider Markit, March data pointed to a further increase in business activity across the U.S. service sector, and the rate of expansion accelerated from the snow-related four-month low seen during February.

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However, job creation remained only modest in March, partly reflecting a moderation in new business growth to its weakest for a year-and-a-half.

At 55.3 in March, up from 53.3 in February, the Markit U.S. Services PMI Business Activity Index signaled a marked acceleration in service sector output growth following disruptions to business activity amid adverse weather conditions in the previous month. The index has posted above the 50.0 no-change value in each month since November 2013, but the latest reading was the second-lowest seen over this period.

Companies that reported an increase in business activity generally cited improving domestic economic conditions and efforts to work through backlogs that had been accumulated in February. As a result, latest data indicated a renewed reduction in volumes of outstanding business at service providers in March, and the rate of decline was the most marked since October 2013. Some firms noted that a lack of pressure on operating capacity had contributed to the drop in unfinished work in March.

Service providers pointed to a further rise in new business levels in March, but the rate of expansion eased for the third month running and was well below last December’s near two-year peak. Softer growth of incoming new orders contributed to another moderation in job creation during March.

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