US ISM Services Index Surges, Strong Demand and Easing Input Prices
The US services sector expanded in February at its fastest pace since mid-2022, buoyed by strengthening new orders and business activity. The Institute for Supply Management (ISM) services index released Wednesday (March 4) rose 2.3 points to 56.1, surpassing all estimates in a survey of economists.
The boost in demand was evident in the new orders component, which rose to 58.6—the highest in more than a year—while exports also strengthened. The business activity index recorded its fastest growth since May 2024, and the backlog of orders surged to a nearly four-year high, signaling a renewed workload for service providers.
In contrast to the manufacturing survey, which showed surging input prices, price pressures in the services sector actually eased. The ISM services prices paid index fell to 63 from 66.6 in January, near a nearly one-year low, amid market concerns about energy inflation.
The strengthening demand was also reflected in the services workforce, which recorded its healthiest growth in a year. On the same day, ADP data showed that US companies added 63,000 private-sector jobs in February—above the consensus of 50,000—while January's figure was revised down to 11,000.
The market now awaits the government's official employment report (NFP) on Friday to test the consistency of the signals from the ISM and ADP, as well as to read the implications of the combination of "strong demand but easing service price pressures" for the Fed's interest rate path.
Source: Newsmaker.id
