Service Sector Activity Slows More Than Expected In February
The nation's service sector expanded at a slower-than-expected rate in February amid a slowdown in new orders, a trade group said Monday.
The Institute for Supply Management, which is based in Tempe, Ariz., said its index of business activity in the service sector was 54.3, down from 59.0 in January. Wall Street analysts had expected a reading of at least 57.0 for the latest month.
A reading above 50 indicates expansion, while one below that indicates contraction.
February marked the 47th consecutive month of business activity growth, the trade group said.
The service industries covered by the ISM report represent about 80 percent of the nation's economic activity, and economists are looking for the sector to be a driver of growth in 2007 as the manufacturing sector struggles with weakness in the automotive and housing industries.
There was little discernible reaction in the stock market which was nervous over tumbling stock markets abroad.
In midmorning trading, the Dow Jones industrial average was up 24.51, or 0.2%, at 12,138.61. The Standard & Poor's 500 index was off 0.49, or 0.04%, at 1,386.68, and the Nasdaq composite index fell 1.11, or 0.05%, to 2,366.89.
Anthony Nieves, head of ISM's survey committee, said business activity and new orders increased at a slower rate in February than in January.
"Members' comments in February are mixed concerning current business conditions. The overall indication in February is continued economic growth in the non-manufacturing sector, but at a slower pace than in January," Nieves said.
The index for new orders weakened to 54.8 in February, down from 55.4 the previous month.
At the same time, however, the employment index strengthened to 52.2, up from 51.7 the month before. Prices moderated to 53.8 in February, from 55.2 in January.
The nine industries reporting growth in February were; health care; professional, scientific and technical services; educational services; utilities; transportation; real estate; accommodation and food services; and information.
The other nine industries reported decreased activity from January to February. Those were mining; agriculture, forestry, fishing and hunting; arts and entertainment; construction; retail trade; management and support services; public administration; finance and insurance; and wholesale trade.