The Institute
for Supply Management (ISM) announced on Tuesday that its Services PMI came in
at 52.6 per cent in February, recording a drop of 0.8 percentage point from an unrevised January reading of 53.4 per cent. The latest figure
indicated that the U.S. services sector expanded for the 14th successive month, albeit at a slightly
weaker pace than in the previous month.
Economists had forecast
the indicator to decrease to 53.0 in February.
A reading above
50 signals expansion, while a reading below 50 indicates contraction.
Of the 18
services industries, 14 reported growth last with the majority of respondents being mostly positive
about business conditions even amid remaining concerns about inflation,
employment and ongoing geopolitical conflicts, the
ISM noted.
According to the
report, the Production index climbed by 1.4 percentage points to 57.2 per cent in February, indicating
growth in output for the 45th month in a row. In addition, the New Orders gauge
jumped by 1.1 percentage points to 56.1 per cent, indicating expansion for the 14th
consecutive month. Meanwhile, the Employment measure fell by 2.5 percentage
points to 48.0 per cent, indicating employment activity in the services sector
returned into contraction territory after one month of growth. The Inventories
indicator declined by 2.0 percentage points to 47.1 per cent, indicating a shrinkage
of inventories for the third successive month, and at a faster rate in February. Elsewhere, the Supplier Deliveries indicator decreased by 3.5 percentage points to 48.9 per cent, indicating faster
performance after a single month of slower performance. The Backlog of Orders
index dropped 1.1 percentage points to 50.3 per cent, indicating an increase in
order backlogs in February for the second consecutive month following two
consecutive months in contraction. On the price front, the Prices index plunged by 5.4
percentage points to 58.6 per cent, indicating that prices paid by services organizations for
materials and services increased in February for the 81st month running.