Despite an increase in business activity, the service sector continued to contract in March, according to the Institute for Supply Management's nonmanufacturing index released today. The index rose to 49.6 in March from 49.3 in February. However, only index readings above 50 indicate growth.

Employment in the service sector also continued to slip. The employment portion of the index was unchanged in March from February at 46.9, a reading indicating contraction.

The report is based on a survey of purchasing and supply executives across the country.