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Business

US service firms grow more slowly, hiring weakens

A medical assistant conducts a check up in Seattle. US service companies grew more slowly in March.

Ted S. Warren/Associated Press

A medical assistant conducts a check up in Seattle. US service companies grew more slowly in March.

WASHINGTON — Two reports Wednesday showed that US service companies grew more slowly in March and private employers pulled back on hiring.

The declines suggest businesses may have grown more cautious last month after federal spending cuts took effect.

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The Institute for Supply Management said that its index of nonmanufacturing activity fell to 54.4 last month. That’s down from 56 in February and the lowest in seven months. Any reading above 50 signals expansion.

Slower hiring and a steep drop in new orders drove the index down. A gauge of hiring fell 3.9 points to 53.3, the lowest since November.

That means companies kept hiring, just at a slower pace.

The ISM report covers companies that employ roughly 90 percent of the workforce.

A separate report from payroll processor ADP also pointed to slightly weaker hiring in March. ADP said private employers added 158,000 jobs in March, down from 237,000 the previous month.

Construction firms didn’t add any jobs after three months of solid gains.

Economists were not overly concerned with the weaker reports. Several noted that ADP’s figures are less reliable than the government’s more comprehensive jobs report, which comes out on Friday.

Still, most say the pace of hiring has almost certainly dropped off from the previous four months, when employers added an average of 200,000 net jobs a month.

And a few reduced their forecasts for March job growth after seeing the two reports.

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