ISM: Service sector expands in February

The ISM Services Index registered 55.1 percent, 0.1 percentage point lower than January’s reading of 55.2 percent. The composite index indicated growth in February for the second consecutive month after a reading of 49.2 percent in December, the first contraction since May 2020 (45.4 percent).

“Thirteen industries reported growth in February. The Services PMI®, by being above 50 percent for a second month after a single month of contraction and a prior 30-month period of expansion, continues to indicate sustained growth for the sector. The composite index has indicated expansion for all but three of the previous 156 months.”

The Business Activity Index registered 56.3 percent in February, a decrease of 4.1 percentage points from the reading of 60.4 percent in January, indicating growth for the 33rd consecutive month. Comments from respondents include: “More elective surgeries after the holiday season” and “Customer growth.”.

Employment Index registered 54 percent, up 4 percentage points from the January figure of 50 percent. Comments from respondents include: “Increase in applications resulting in more new hires” and “Level of employment higher to backfill positions in support of workloads.”

New Orders Index registered 62.6 percent, up 2.2 percentage points from the January reading of 60.4 percent. New orders expanded for the second consecutive month after contracting in December, ending a string of 30 consecutive months of growth. Comments from respondents include: “Increased requests for service and components” and “Customers starting to ramp up for the spring season.”

Supplier Deliveries Index registered 47.6 percent, down 2.4 percentage points from the 50 percent recorded in January. A reading above 50 percent indicates slower deliveries, while a reading below 50 percent indicates faster deliveries. The February reading indicates supplier deliveries are faster compared to the previous month. Comments from respondents include: “Suppliers have been catching up on their backlogs” and “Suppliers’ lead times are coming down, and capacities have opened up.”

Read the ISM release.