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Last Updated: Wednesday, 4 April 2007, 15:32 GMT 16:32 UK
US service sector growth slowing
American Airline planes at Miami Airport
The service sector survey includes the airline industry
The rate of growth in the US service sector slowed in March, with firms worried over rising fuel costs and the wider economy, a key report has found.

The Institute for Supply Management's index of non-manufacturing industries slipped to 52.4 last month, its lowest level since 2003.

Down from 54.3 in February, the markets had expected a rebound in March.

Some 80% of US economic activity is service-sector based, and analysts are fearful of a wider contraction.

The service industry includes everything from restaurants and hotels to banks and airlines.

'Sluggish pace'

"It's looking pretty dark," said Richard Dekaser, chief economist with National City.

"On the whole, it speaks to the sluggish pace that the economy is moving at in recent quarters."

The survey also found that the rate of growth in new orders and employment slowed in March, while the prices firms had to pay for fuel and other goods increased dramatically.

Hugh Johnson, chief investment officer for Johnson Illington Advisors said the mixture of higher prices and lower orders was "a bad combination".

Analysts had been expecting to see a figure of 54.7 in March.

Asking respondents a number of questions, any figure above 50 indicates growth in the sector.

The service industry figures came as separate Commerce Department data showed new orders at US factories increased a lower-than-expected 1% in February as machinery and metals orders declined.

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