U.S. Service Industries Expand at Weakest Pace Since August as Orders Drop

[Purveyor]

May 4 (Bloomberg) -- Service industries in the U.S. expanded in April at the slowest pace in eight months as higher fuel prices prompted companies to cut back.

The Institute for Supply Management’s index of non- manufacturing companies declined to 52.8 last month from 57.3 in March. Readings greater than 50 signal growth, and the median forecast of economists surveyed by Bloomberg News called for a gain to 57.5. A gauge of new orders dropped by the most since record-keeping began in 1997.

Stocks fell and Treasuries rose on signs gasoline prices at their highest levels in almost three years are blunting purchases of other goods and services. Employment in the services industry fell to a seven-month low, indicating increased corporate costs may be restraining hiring, one reason why the Federal Reserve last week said it would maintain record monetary stimulus.

“It’s another sign that we’re losing momentum more broadly in this recovery,” said Tim Quinlan, an economist at Wells Fargo Securities LLC in Charlotte, North Carolina. “Businesses are still concerned about pricing power.”

MORE...

http://noir.bloomberg.com/apps/news?pid=20601087&sid=akMCDyd2rEuY