The U.S. service sector grew for the ninth consecutive month in February but the pace of growth unexpectedly dipped as companies dealt with severe weather in much of the country.
The Institute for Supply Management said Wednesday that its services index declined to 55.3 during the month, the lowest level in nine months and down dramatically from the two-year high of 58.7 in January.
Readings above 50 signal growth.
Economists had predicted the index would hold the January figure. The actual score was lower than the lowest forecast of economists surveyed by Econoday.
The gauges of new orders and business activity dropped to the lowest readings since May.
The measure of prices jumped higher, indicating that prices increased in February, and at a faster rate. That could add to concerns about looming inflation.
“Respondents are mostly optimistic about business recovery and the economy. Production-capacity constraints, material shortages and challenges in logistics and human resources are impacting the supply chain,” said Anthony Nieves, chair of the ISM Services Business Survey Committee.
It was not all bad news. The ISM index of order backlogs rose to a six-month high of 55.2. Export demand was the strongest since June. This could be an indication that the slowdown in February was temporary and mostly weather-related.