The U.S. service sector expanded for the 27th consecutive month in March, but at a slower pace, a widely recognized U.S. private survey revealed on Wednesday.

The Non-Manufacturing Index (NMI), which measures activity in the U.S. service sector, dropped to 56 in March from 57.3 in February, indicating continued growth at a decelerated rate, the Institute for Supply Management (ISM) said in its monthly survey.

A reading above 50 indicates a general expanding of the service sector, while a reading below 50 indicates contraction.

The index showed that new orders, a signal of future business, decreased last month to 58.8 from 61.2 in February, while the survey's employment component increased to 56.7 in March from 55.7 in February, said the ISM.

A total number of 16 industries reported expansion last month including construction, real estate, finance and insurance, while two other industries including mining reported contraction.

The NMI index is closely watched because the service sector absorbs the major chunk of the U.S. workforce, and is a key indicator for the overall health of the economic recovery.

A separate employment report released Wednesday by Automatic Data Processing, Inc. (ADP) said U.S. private sector added better-than-expected 209,000 jobs in March.