Economic activity in the US services sector expanded faster than expected in February, as the biggest part of the economy helped offset factory weakness in the face of mounting trade tensions and policy uncertainty.
The services purchasing managers index (PMI) rose to 53.5 in February, up from 52.8 in January, according to the Institute for Supply Management (ISM). It was the eighth consecutive month of expansion, above the 50 breakeven mark, and was higher than the 52.6 anticipated by economists surveyed by Trading Economics.
"Slightly slower growth in the business activity index was more than offset by growth" in new orders, employment and supplier deliveries, ISM said. "Anxiety continues, however, over the potential impact of tariffs. Some respondents indicated that federal spending cuts are having negative impacts on their business forecasts."
The ISM survey was released two days after ISM's manufacturing survey showed the segment barely expanding, for only a second month of growth after 26 months of contraction. Intensifying global trade tensions and massive federal job and spending cuts unleashed by the new US administration are generating volatility in financial and commodity markets and heightening concerns of mounting inflation and faltering economic growth.
The business activity index was at 54.4, down by 0.1 point from the prior month, but the index's 57th consecutive month of expansion above the 50 breakeven level.
The new orders index rose to 52.2 from 51.3.
The employment index rose to 53.9, a fifth month of expansion, from 52.3 in January.
The prices index registered 62.6, up from 60.4 and a third consecutive month above 60.
By Bob Willis
