(Bloomberg) -- Growth in the US services sector eased in March for a second month while a gauge of input costs slumped to a four-year low.

The Institute for Supply Management’s composite gauge of services fell 1.2 points to 51.4, largely reflecting a drop in the supplier deliveries index to a record low. Readings above 50 indicate expansion, and the March figure was lower than all but one estimate in a Bloomberg survey of economists.

The index of prices paid for materials and services decreased more than 5 points to 53.4, the lowest since March 2020, according to the report issued Wednesday.

That stands in stark contrast to ISM data earlier week showing a manufacturing input-cost gauge climbed to the highest level since July 2022, suggesting the pace of goods disinflation is leveling off.

Read more: US Manufacturing Activity Expands for First Time Since 2022

The services price data may temper concerns that the Federal Reserve’s progress on inflation is at risk of stalling. Policymakers are tracking developments in the services sector, the largest part of the economy, for signs of easing price pressures as they debate when to reduce interest rates.

“The plunge in the prices paid index to the lowest level since the pandemic began implies that core services ex-housing inflation, aka supercore, will resume falling back toward its pre-pandemic normal rate,” Stephen Brown, deputy chief North America economist at Capital Economics, said in a note.

With the decline in March, ISM’s gauge of prices paid by services dipped below the manufacturing input-cost measure for the first time since May 2022.

Still, service-industry respondents noted “that even with some prices stabilizing, inflation is still a concern,” Anthony Nieves, chair of the ISM Services Business Survey Committee, said in a statement.

Nieves said on a call with reporters that because fuel costs are rising again, he doesn’t anticipate input costs for services to continue falling.

The overall services index was depressed by the gauge of delivery times, which dropped 3.5 points to the lowest in ISM data back to 1997. Signs of improving supply chains help explain why order backlogs at service providers shrank at the fastest pace since August.

Twelve services industries reported growth in March, led by accommodation and food services. Four indicated a decrease in activity.

The ISM new orders gauge fell to a three-month low, though remained consistent with resilient demand.

The group’s business activity index — which parallels its factory output gauge — showed the strongest growth since September.

Select ISM Industry Comments

“National business conditions remain strong in the industrial construction market. Labor is still tight across the country for skilled trades positions.” - Construction

“We are experiencing a budget shortfall, like many of our peers in higher education, so our spending will be down at the end of this fiscal year (June 30). Hiring is at a much slower pace as well, and we are still experiencing high employee turnover.” - Educational Services

“Continued inflationary pressure across multiple clinical device categories as contracts expire or are renewed.” - Health Care

“Activity level holding steady for oil and gas.” - Mining

“Our company and industry continue to pull back to prepare for economic volatility in the second half of the year. Cost reduction initiatives remain a top-five company objective, even in a high-growth environment.” - Professional, Scientific & Technical Services

“Product supply chain is calm, and pricing steady. “ - Retail Trade

“Lead times and supply are improving, but several strategic items remain difficult to procure.” - Utilities

The measure of services employment ticked up slightly but remained in contraction territory.

Meanwhile, an index of inventories at service providers retreated to the lowest level since the end of 2022. A gauge of sentiment about inventories, while still indicating companies see stockpiles as too high, fell for the second straight month.

--With assistance from Chris Middleton.

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