By Colin Kellaher

Growth in services activity in the middle of the U.S. fell a bit in March, and expectations for future activity slowed moderately, according to a monthly survey by the Federal Reserve Bank of Kansas City.

The Tenth District Services Survey's composite index, a weighted average of indexes covering revenue/sales, employment and inventory, came in at minus 4 in March, down from a reading of 1 in February but up from minus 11 in January. Readings above zero indicate expansion, while those below zero indicate contraction.

The Kansas City Fed said March's decline was driven by slowing in wholesale trade, auto and professional services activity, which more than offset gains in real-estate, restaurant and tourism activity during the month.

The bank said its index of expectations for future services activity fell to 2 in March from 13 in February.

Chad Wilkerson, senior vice president at the bank, noted that nearly 70% of firms surveyed reported lower profit margins from the start of the year due to price pressures.

The Kansas City Fed's survey includes participants from such service industries as retail and wholesale trade, automobile dealers, real estate and restaurants. The survey provides information on current services activity in the Tenth District, which includes Colorado, Oklahoma, Wyoming, Nebraska, Kansas, the northern half of New Mexico and the western third of Missouri.

The bank's monthly manufacturing survey, released Thursday, showed that factory activity in the central U.S. region was broadly stable in March for the second month in a row, suggesting the factory sector continues to face headwinds amid weakening demand.

Write to Colin Kellaher at colin.kellaher@wsj.com

(END) Dow Jones Newswires

March 24, 2023 11:47 ET (15:47 GMT)