Wednesday, March 5, 2014

Service Sector Expansion Cooled in February

Growth in the service sector slowed slightly in February, with the ISM’s non-manufacturing index falling 2.4 points to 51.6. Despite the slight decline, February’s reading signifies growth, as any reading above 50 representing industry expansion. The cold weather likely impacted February’s disappointing report.

The details of January’s report were weak. The business activity sub-index fall to 54.6 is 2.2 points below its 2013 average. The employment index took a big hit and dropped below the expansionary threshold to 47.5. It’s the lowest value in at least 3 years. The employment index reading is consistent with the weak ADP jobs number this morning, which reported a private sector gain of 139,000 jobs in February. Exports dropped as well to 47.5, remaining a second month below the expansionary threshold.

A bright spot was new orders, which rose to 51.3 for the second consecutive month. However, it still has yet to recover from the losses in December.

Read the ISM release.

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