THE SERVICES sector grew again last month, but the pace of growth moderated compared to February, new data showed today.

The NCB services Purchasing Managers’ Index for March, which measures activity in the services sector, registered a reading of 51.1, lower than the 55.1 recorded in February, but still above the 50 mark which separates expansion from contraction.

However, employment in the sector fell once more. A reading of 48.3 for the month indicates new hiring in services firms is being more than offset by lay-offs. The reading was down on February and the lowest in three months.

“Staffing levels in the sector have decreased in each month since March 2008,” said NCB chief economist Brian Devine.

“This remains the key problem for economic growth; the economy needs to break the negative feedback loop between declining services sector employment levels and domestic demand.”

New business grew, but at a slower rate. The new business subindex reading fell to 51.7 in March from 53.3 a month earlier.

Services exports continued to strengthen according to the survey, but at a weaker pace than previous months. The new export orders subindex fell to 52.7 in March from 56.6 in February.

“New export orders have risen in 18 of the past 19 months, with some respondents indicating a focus on external markets,” said Mr Devine.

In the euro zone, service sector companies powered ahead at the fastest rate since August 2007, although growth eased in the US.

Germany and France again spearheaded the recovery of the euro zone’s services sector, although the contrast between their strong growth and weakness elsewhere – which had lessened in recent months – was strongly in evidence in March.

The zone’s fourth-largest economy, Spain, resumed a trend of contraction dating back to last August, punctuated by a month of weak growth in February.

The Markit Eurozone Services Purchasing Managers’ Index, which measures changes in the activities of euro zone firms, from banks to restaurants, rose to 57.2 in March from 56.8 in February – its 19th month of expansion.

In the US, growth slowed last month, held back in part by supply disruptions caused by Japans earthquake. After hitting a five-year high in February, the Institute for Supply Managements index of non-manufacturing activity slipped back in March and prices eased. Nonetheless, the services sector posted a 16th straight month of growth. – (Additional reporting, Reuters)