Service Industries Grow Near Fastest in at Least a Decade
U.S. service industries expanded in February near the fastest pace in at least a decade, signaling the economy is on track for steady growth this quarter, according to a survey from the Institute for Supply Management on March 5.
Highlights of February ISM Non-Manufacturing Survey
• Non-manufacturing index eased to 59.5 (estimated 59) from 59.9; readings above 50 indicate growth
• Measure of business activity rose to almost one-year high of 62.8; gauge of new orders jumped to 64.8, highest since 2005, from 62.7.
• Employment index fell to 55 from December’s 61.6 reading that was the highest in data back to 1997
Key Takeaways
The results from the Tempe, Arizona-based group extend the solid start to the year for services that account for about 90% of the economy and span industries such as retail, utilities, health care, and construction. The February index compares with a 57 average for all of 2017.
While the services employment index suffered its biggest one- month drop since 2014, the gauge is still in line with its average for last year. In addition, growth in orders and backlogs signals a solid pipeline of business, supported by a tight job market and elevated confidence.
A separate ISM survey last week showed manufacturing grew in February at the fastest pace since 2004. At the same time, President Donald Trump’s plan to impose tariffs on imported steel and aluminum has added a headwind to the outlook. His move risks sparking a trade war that could lift inflation, hurt business sentiment and weigh on economic growth.
Other Details
• Index of supplier deliveries unchanged at 55.5.
• Gauge of prices paid decreased to 61 from 61.9.
• Measure of order backlogs rose 5.5 points to 56, biggest one- month gain since 2013; export orders measure increased to 59.5 from 58.
• Official ISM data on main non-manufacturing index begin in 2008, though Bloomberg has calculated the index for previous years based on the subindexes.
With assistance by Alexandre Tanzi
