The ISM Services Index increased 0.7 percentage points (points) to 53.5%.
“Fourteen industries reported growth in February, equaling the previous month’s total. The Services PMI® has expanded in 54 of the last 57 months dating back to June 2020. The February reading of 53.5% not only exceeds the January reading of 52.8% but is also a full percentage point above the average PMI® reading of 52.5 for the last 12 months.” “February was the third month in a row with all four subindexes that directly factor into the Services PMI®, Business Activity, New Orders, Employment and Supplier Deliveries, in expansion territory, the first time this has happened since May 2022. Slightly slower growth in the Business Activity Index was more than offset by growth in the other three subindexes. Anxiety continues; however, over the potential impact of tariffs. Some respondents indicated that federal spending cuts are having negative impacts on their business forecasts,” said Steve Miller, CPSM, CSCP, Chair of the Institute for Supply Management® (ISM®) Services Business Survey Committee.
The Business Activity Index registered 54.4% in February, 0.1 percentage point lower than the 54.5% recorded in January. This is the index’s 57th consecutive month of expansion. The Supplier Deliveries Index registered 53.4%, 0.4 percentage point higher than the 53% recorded in January. This is the third consecutive month the index has been in expansion territory, indicating slower supplier delivery performance. (A reading of below 50% indicates faster deliveries). The Prices Index registered 62.6% in February, a 2.2-percentage point increase from January’s reading of 60.4%. The index registered a third consecutive reading above 60% for the first time since March 2023. Respondents commented: “Concern regarding tariffs. No impact yet.” (Management of Companies & Support Services).
The Inventories Index landed in expansion territory after three months in contraction. The reading of 50.6% is a 3.1-percentage point increase compared to the 47.5% reported in January. The Employment Index remained in expansion territory for the fifth consecutive month; the reading of 53.9% is a 1.6-percentage point increase compared to the 52.3% recorded in January. Respondents commented: “Business seemed to pop after the election, but uncertainty after the election seemed to take the ‘wind out of our sales,’ with uncertainty again increasing.” (Professional, Scientific & Technical Services).
The Inventory Sentiment Index grew for the 22nd consecutive month in February. The index registered 54.7%, an increase of 1.2 percentage points from January’s figure of 53.5%. This reading indicates that respondents feel their inventories are too high when correlated to industry levels.
Read the ISM release.
