Growth in the vast US services sector accelerated in February, bouncing back from a lacklustre month that included a partial shutdown of the federal government, according to a closely-watched survey.
The Institute for Supply Management said Tuesday its non-manufacturing index climbed to 59.7, up from 56.7 in January and better than economists’ forecast of 57.3. A reading above 50 indicates expansion.
The report for January showed that growth in the services sector, which accounts for the majority of US gross domestic product, had slowed month-to-month amid a government shutdown that ran from December 22 to January 25.
Anthony Nieves, chair of the ISM’s non-manufacturing business survey committee, said companies in the latest survey remained mostly optimistic about business conditions and the US economy overall. However, respondents were concerned about the “uncertainty of tariffs, capacity constraints and employment resources.”
One company in the utilities industry said tariffs continue to have an impact, while a labour shortage remains the biggest supply challenge. Another group in retail trade noted that tariffs were still in place, but “confidence is returning in the marketplace.”
An index that measures new orders rose to 65.2 in February from the prior month’s 57.7. The prices index fell to 59.4 from 54.4, an indication that prices paid by non-manufacturing groups increased for a 21st consecutive month. The employment index hit 55.2, down from 57.8.
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