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ISM non-manufacturing index hits 54.5 in March, vs. 54 estimate

An employee checks labels of "Naranja Agria" on the bottling line at the Badia Spices factory in Doral, Florida.
Mark Elias | Bloomberg | Getty Images
An employee checks labels of "Naranja Agria" on the bottling line at the Badia Spices factory in Doral, Florida.

The U.S. economy's service sector expanded in March, a signal that business conditions are moving at a positive pace, according to an industry report released on Tuesday.

The Institute for Supply Management (ISM) said its index of non-manufacturing activity rose to 54.5 from 53.4 the month before. The reading was just above expectations of 54.0 from a Reuters poll of 74 economists.

A reading above 50 indicates expansion in the service sector and a reading below 50 indicates contraction.

The business activity index rose to 59.8 from 57.8 the month before. That was just above expectations of 57.4.

The employment index rose to 50.3 from 49.7 a month earlier. New orders climbed to 56.7 from 55.5. The prices paid index rose to 49.1 from 45.5.

The pace of growth in the U.S. economy's manufacturing sector increased in March, according to an earlier ISM report.

— Reuters contributed to this report.