During April, U.S. services sector grew at slowest pace since August 2010  On Monday, the Institute of Supply Management released its April report on U.S. manufacturing activity. On Wednesday, the ISM released its April assessment of the U.S. non-manufacturing sector, which received a lukewarm reception from economists who had projected a bigger uptick in growth.

The Wednesday report underscores the relative strength of the non-manufacturing sector in the U.S., which typically accounts for more than 90 percent of the economy. According to the ISM, the non-manufacturing index registered 52.8 percent in April, declining from March when it hit 57.3 percent. While April's figure indicates growth, it illustrates a slowdown from March's torrid expansion rate. A rate above 50 percent shows that the sector is expanding.

Moreover, the business activity index fell six percentage points to 53.7 percent. While the sector experienced growth for the 21st consecutive month, its rate of expansion slowed from the month prior. Worrying analysts, the new orders index plummeted to 52.7 percent, representing a decline of 11.4 percentage points. The employment index sank 1.8 percentage points to 51.9 percent, showing the rate of net job creation ebbed from March.

On a more positive note, the prices index decreased 2 percentage points to 70.1 percent. That was welcome news to analysts and inflation hawks who worry that rising commodity prices would continue to drive inflation rates upward, potentially disrupting the nascent economic recovery.

Seventeen industries reported an expansion in April, with only retail trade asserting its growth had slowed during the month. Nonetheless, executives from sectors that experienced growth in April are increasingly concerned about future growth prospects, the report states. One public administration official told the ISM that "fuel prices continue to be challenging and in addition to shipping, are influencing the cost of materials."

The 9.0-magnitude earthquake and subsequent tsunami that battered Japan in March have caused supply chain disruptions throughout the globe, and some businesses are worried that further supply issues could hurt their growth - especially during the second half of 2011. A representative from the support services sector affirmed that "business conditions remain unchanged," but noted that they "continue to track with the supply base."

April's non-manufacturing index hit its lowest reading since August 2010. 
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