NEW YORK The U.S. services sector expanded in April at a slower rate than the previous month as employment creation decelerated, an industry report showed on Friday.
Financial data firm Markit said its "flash" services Purchasing Managers Index hit 54.2 in April compared with March's final reading of 55.3.
A reading above 50 signals expansion in economic activity.
The services sector added employees at the slowest rate in almost two years, with the employment subindex at 51.0, its lowest since June 2012, down from 51.8 last month.
Markit's "flash" composite PMI, a weighted average of its manufacturing and services indexes, hit 54.9 in April versus 55.7 in March. It was below the average for the first quarter of this year, which was 55.3.
"These data challenge the view among many, including some key policymakers, that the recent deterioration in some of the economic data has been purely a symptom of the adverse weather at the start of the year," said Chris Williamson, chief economist at Markit.
He said surveys are running at a level broadly consistent with annualized GDP growth of 2.0 percent while employment subindexes point to non-farm payroll growth sliding to around 100,000 per month.
The government non-farm payrolls report is due next Friday and is expected to show 203,000 net new jobs were created in April, according to a Reuters survey.
(Reporting by Rodrigo Campos; Editing by Chizu Nomiyama)