The U.S. service sector expanded in March for the 16th straight month, although growth slowed from the previous month's pace, which was the fastest in more than five years.

The Institute for Supply Management, a private trade group, said Tuesday that its index of service-sector activity dropped to 57.3 last month, from 59.7 in February. That's the first decline in seven months. Still, any reading above 50 indicates expansion.

The sector employs about 90 percent of the work force, with a range of industries that include retail, health care, financial services and construction. The index plummeted to 37.6 in November 2008, at the height of the financial crisis.

Several companies that responded to the survey expressed concerns about rising fuel prices and the impact of Japan's earthquake on the supply of computer equipment and other goods.

Still, a measure of prices paid actually dipped in March.

"Overall, most respondents remain confident about the direction of the economy," said Anthony Nieves, who oversees the survey for the ISM.

A measure of new orders dipped slightly and an employment index also dropped, though the survey found employment at services firms is still growing.