(April 3): US service providers expanded in March at the slowest pace in nine months as orders growth cooled and a measure of employment tumbled to the lowest since 2023.

The Institute for Supply Management’s (ISM) gauge of services dropped to 50.8 from 53.5 a month earlier, according to data released on Thursday. The figure was weaker than all but one estimate in a Bloomberg survey of economists. Readings above 50 signal growth.

A gauge of services employment sank by 7.7 points, the most in nearly five years, to 46.2. Excluding the immediate aftermath of the pandemic, the monthly decline was the largest since a weather-induced slump in February 2014.

A month earlier, the employment index advanced to the highest level since the end of 2021. A Wednesday report showed private-sector hiring accelerated in March by more than projected in a fairly broad advance.

A sustained trend of weaker employment readings may raise concerns of a broader slowdown in a labour market that has been the economy’s bedrock. Meanwhile, the ISM prices-paid index eased slightly to a still-elevated 60.9 in March.

“There has been a significant increase this month in the number of respondents reporting cost increases due to tariff activity,” Steve Miller, chair of the ISM Services Business Survey Committee, said in a statement.

“Despite an increase in comments on tariff impacts and continuing concerns over potential tariffs and declining governmental spending, there was a close balance in near-term sentiment, between panellists with good outlooks and those seeing or expecting declines,” Miller said.

Ten industries reported growth in March, led by accommodation and food services, transportation and warehousing, as well as finance and insurance. Seven industries, including management and support services, contracted.

The ISM orders index for service providers retreated nearly two points to 50.4, showing limited growth. At the same time, the group’s measure of business activity, which parallels its factory output gauge, increased to the highest level this year.

The decline in bookings may reflect the growing uncertainty many firms are experiencing as the Trump administration pushes forward with tariffs. Businesses are also awaiting lawmakers’ tax legislation expected later this year.

Companies’ assessments of their inventory levels may also be playing a role. A gauge of inventory sentiment rose to the highest level since July, indicating a greater share see their stockpiles as too high. Also, service-firm exports contracted for time in four months.

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