U.S. Services Index Unexpectedly Inches Higher In February

(RTTNews) - The Institute for Supply Management released a report on Wednesday showing an unexpected uptick by its reading on U.S. service sector activity in the month of February.

The ISM said its services PMI inched up to 53.5 in February from 52.8 in January, with a reading above 50 indicating growth. Economists had expected the index to edge down to 52.6.

The modest increase by the headline partly reflected faster growth by new orders, as the new orders index rose to 52.2 in February from 51.3 in January.

The employment index also climbed to 53.9 in February from 52.3 in January, indicating modestly faster job growth in the service sector. The supplier deliveries index also crept up to 53.4 in February from 53.0 in January.

Meanwhile, the business activity index edged down to 54.4 in February from 54.5 in January but still indicate growth.

"February was the third month in a row with all four subindexes that directly factor into the Services PMI — Business Activity, New Orders, Employment and Supplier Deliveries — in expansion territory, the first time this has happened since May 2022," said Steve Miller, Chair of the Institute ISM Services Business Survey Committee

"Anxiety continues; however, over the potential impact of tariffs," he added. "Some respondents indicated that federal spending cuts are having negative impacts on their business forecasts."

The report also said the prices index increased to 62.6 in February from 60.4 in January, registering a third consecutive reading above 60 for the first time since March 2023.

A separate report released by the Institute for Supply Management on Monday showed its reading on U.S. manufacturing edged slightly lower in February, although the index still indicated growth in the sector for the second straight month.

The ISM said its manufacturing PMI slipped to 50.3 in February after rising to 50.9 in January, but a reading above 50 still indicates growth. Economists had expected the index to dip to 50.5.