Service-oriented businesses showed growth for the 27th consecutive month, but the headline Purchasing Managers Index eased back from 57.3 percent to 56 percent.
The index uses 50 as a break-even point. Above 50 indicates growth. Below 50 indicates a contraction.
Although the headline index slipped, the index for employment posted at 56.7 percent, up from February's 55.7 percent.
Employment has risen for three consecutive months in service businesses.
The inventories index also rose in March, climbing from 53.5 percent to 54 percent. But the critical new orders index fell from 61.2 percent to 58.8 percent, continuing a 32-month growth trend, but at a slower pace.
In the month, 16 of 18 service industries tracked in the report showed growth, led by arts, entertainment and recreation, management and support services for companies and accommodation and food services.