Service sector shrinks for 6th straight month

NEW YORK —  A private trade group’s measure of the strength of the U.S. economy’s service sector declined for the sixth straight month in March, and at a faster pace than expected, as job losses climbed.

The service index from the Institute for Supply Management, a Tempe, Ariz.-based trade group of purchasing executives, fell to 40.8 last month from 41.6 in February.

Economists surveyed by Thomson Reuters expected the index to edge up to 42.

Any reading below 50 indicates contraction.

“We haven’t stopped free-falling,” said Joel Naroff, president of Naroff Economic Advisors.

The report is based on a survey of the institute’s members in 18 industries.

It covers such indicators as new orders, employment and inventories. About three-quarters of Americans work in service-providing industries such as hotels, retail, education and healthcare.

The measure of businesses’ new orders, which presage any recovery in hiring and production, fell to 38.8 from 40.7 in February.

The employment index shrank for the 14th time in 15 months, dropping to 32.3 from 37.3 in February.

Analysts had expected the service index to rise slightly after recent modest improvements in home and car sales, and a related measure of the manufacturing sector.

The Institute for Supply Management on Wednesday said its manufacturing index rose to 36.3 in March from 35.8 in February. The reading beat expectations, but that sector has shrunk for 14 straight months.

The service report found that the real estate industry grew in March, while the other 17 industries contracted.