2020.03.0414:28:00UTC+00U.S. Service Sector Growth Unexpectedly Accelerates To One-Year High

Partly reflecting a notable acceleration in the pace of growth in demand, the Institute for Supply Management released a report on Wednesday showing activity in the U.S. service sector unexpectedly grew at a faster rate in the month of February.

The ISM said its non-manufacturing index climbed to 57.3 in February from 55.5 in January, with a reading above 50 indicating growth in service sector activity.

The increase by the reading on service sector activity came as a surprise to economists, who had expected the index to edge down to 54.9.

With the unexpected uptick, the non-manufacturing index reached its highest level since hitting 58.5 in February of 2019.

The advance by the headline index came as the new orders index surged up to 63.1 in February from 56.2 in January, reaching its highest level since June of 2018.

The employment index also rose to 55.6 in February from 53.1 in January, indicating a faster rate of job growth in the service sector.

On the other hand, the report said the business activity index fell to 57.8 in February after jumping to 60.9 in the previous month.

The prices index also tumbled to 50.8 in February from 55.5 in January, pointing to a notable slowdown in the pace of price growth.

Anthony Nieves, Chair of the ISM Non-Manufacturing Business Survey Committee, said the service sector saw continued growth in February but noted most respondents are concerned about the coronavirus and its supply chain impact.

"They also continue to have difficulty with labor resources," Nieves said. "They do remain positive about business conditions and the overall economy."

A separate report released by the ISM on Monday showed U.S. manufacturing activity saw a slight expansion in the month of February.

The ISM said its purchasing managers index edged down to 50.1 in February from 50.9 in January, while economists had expected the index to dip to 50.5.