Economic activity in services declines slightly in February but remains in growth mode
Economic activity in the services sector increased in February for the 21st consecutive month, with the services PMI registering 56.5%, according to the latest services ISM Business reports from Supply Management Institute.
“In February, the Services PMI came in at 56.5%, 3.4 percentage points below January’s reading of 59.9%,” said Anthony Nieves, CPSM, CPM, APP, CFPM, Chairman of the ISM’s committee of inquiry into service companies. “The business activity index recorded 55.1%, a fall of 4.8 percentage points from January’s reading of 59.9%, and the new orders index figure of 56, 1% is 5.6 percentage points lower than January’s reading of 61.7%.
“The Supplier Shipments Index recorded 66.2%, 0.5 percentage points higher than the 65.7% reported in January. (Supplier Shipments is the only ISM Business report index which is inverted; a reading above 50% indicates slower deliveries, which is typical as the economy improves and customer demand increases.)
“The price index recorded 83.1%, up 0.8 percentage points from January’s figure of 82.3%. Services companies are beginning to replenish inventories, as the inventory index (50.8%, up 1.4 percentage points from January’s reading of 49.4%) and the Inventory sentiment (55.3%, up 7.8 percentage points from January’s reading of 47.5%) rose in February. to emerge from a contraction or “too low” territory.
“According to the services PMI, 14 industries recorded growth. The composite index showed growth for the 21st consecutive month after a two-month contraction in April and May 2020. Although there was a pullback for most of the indices that make up the services PMI in February, growth slowed down. continues for the service sector, which has expanded in all but two of the past 145 months. Respondents continue to be impacted by supply chain disruptions, capacity constraints, inflation, logistical challenges and labor shortages. These conditions have affected the ability of panelists’ businesses to meet demand, resulting in slower business activity and economic growth.
The 14 service industries with growth in February included construction, transportation and warehousing, and mining. The four industries reporting declines in February were real estate, rental and leasing; arts, entertainment and recreation; agriculture, forestry, fishing and hunting; and accommodation and food services.