Service sector activity picks up in March

The US service sector is rocking.

In March, Markit's service sector PMI reading rose to 59.2. beating expectations.

Expectations were for the reading to come in at 58.6, unchanged from the flash reading earlier this month.

This reading signaled the fastest pace of expansion in service sector output since August 2014.

Here's Markit:

March data indicated that the performance of the U.S. service sector continued to rebound after a slowdown at the turn of the year. Business activity, new work and employment levels all increased at a faster pace in March. Moreover, input cost inflation remained relatively subdued and prices charged by service providers increased at only a modest pace. However, despite a strong upturn in service sector activity since February, the latest survey indicated that year-ahead business activity expectations were the lowest recorded for eight months.

In March, staffing levels in the service sector extended their increase to 5 years and saw the fastest expansion since June 2014.

However, the business outlook from survey respondents "indicated a greater degree of caution about the business outlook, with the level of positive sentiment the second-lowest since November 2012."

Following this report, Markit's Tim Moore said:

"The latest survey highlights a strong underlying pace of US economic growth moving into the second quarter of 2015. New business trends across the service sector have picked up especially sharply from the lows seen earlier in the year, and job hiring has strengthened as a result.

"However, service providers' business confidence dipped in March and remained well below the peaks recorded in 2014, weighed down in part by the prospect of a Fed rate rise later this year. Meanwhile, subdued input price pressures were reported in March, although the overall rate of cost inflation has ticked up slightly from a recent five year low."

The latest reading from Markit comes on the backdrop of a March jobs report that missed expectations as a number of signals from the US economy this winter have seriously disappointed.