Instant View: Service sector growth eases in March

Reuters

NEW YORK (Reuters) - The U.S. services sector growth slowed in March, according to an industry report released on Tuesday.

KEY POINTS: * The Institute for Supply Management said its index of non-manufacturing activity fell to 57.3 last month. The index hit 59.7 in February, a five-year high. * The March result was below the 59.5 median forecast of the 71 economists surveyed by Reuters. A reading above 50 indicates expansion in the sector.

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COMMENTS:

PAUL RADEKE, VICE PRESIDENT AT MINNEAPOLIS-BASED KDV WEALTH MANAGEMENT:

"We're looking at this as a pause, we don't want to call it a slowdown. We haven't adjusted our view on the sectors we focus on as a result of this, and we're not planning to, even though we do a lot of investing based on economic cycles.

"We were hoping that the ISM wouldn't show any impact from global events, so it is a little disheartening to see the dip, but we're trying to dive in and see if foreign issues are part of the reason for the fall, even though it wasn't really a big fall, especially coming off a five-year high in February.

"The market movement today is a little bit of profit taking coming off the positive movements we've seen. We keep seeing two-year highs, and this is just a pause, positioning before earnings season."

GARY THAYER, CHIEF MACRO STRATEGIST, WELLS FARGO ADVISORS, ST. LOUIS, MISSOURI:

"The ISM non-manufacturing index was a little softer in March, but still showed decent expansion.

"The orders component is still encouraging, but the reading on inventories suggests that a lot of businesses think they are adequately stocked. That suggests we are likely to see continued growth in the economy, but at a moderate pace."

RUDY NARVAS, SENIOR ECONOMIST, SOCIETE GENERALE, NEW YORK:

"It was much weaker than expected. New orders were down marginally and prices paid were down as well. It suggests that we are still in expansion mode but things are slowing down a little bit. The data on balance has been sort of mixed. A lot of people are downgrading their Q1 (growth) estimates and we are as well. It looks like there is some momentum being lost in some areas of the economy but at the same time the jobs market is picking up and if that continues then the rest of the economy should follow suit."

MARKET REACTION: STOCKS: U.S. stock indexes were little changed. BONDS: U.S. bond prices trimmed losses modestly. FOREX: The dollar was slightly weaker against the euro.

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