Service sector expands at a slower pace in April

Expansion of the sector is indicated by readings of at least 50. 

While the sector, which employs nearly 90 percent of all workers, has been growing for 33 straight months, the new orders and employment indexes decreased last month, falling 5.3 percentage points to 53.5 percent, and by 2.5 percentage points to 54.2 percent, respectively. 

The prices index dropped sharply, by 10.3 percentage points to 53.6 percent, indicating prices increased at a significantly slower rate in April when compared with March. 

The index is a survey of a wide variety of businesses, including those employed at restaurants, hotels and retailers.

In a separate report this week, payroll processor ADP said the economy added 119,000 private-sector jobs, a much slower rate than the 201,000 in March. 

The service sector took on the bulk of the jobs, as it has been doing in recent months, although at a slower pace than March. Restaurants and bars were among those employers that added 123,000 jobs in April, down from 158,000 in March.

The Labor Department's report, which includes government jobs, is due out Friday. 

The economy is estimated to have added about 163,000 jobs last month, while the unemployment rate remained at 8.2 percent.

Hiring needs to pick up to boost demand as consumer spending represents 70 percent of economic activity. 

Weekly unemployment benefits claims took a steep drop last week, falling by 27,000 after an upward revision the previous week, a signal that the labor market's recovery is improving, albeit at a slower pace than during the winter months. 

Economists had argued that jobs were being added too quickly compared with the economy's expansion, which slowed to 2.2 percent in the first quarter, below the 3 percent gain in the final three months of the year.