Growth in the vast US services sector picked up pace in February to its highest level in a year, defying the economic fallout from the global spread of coronavirus.
Economic activity in the non-manufacturing sector jumped to a reading of 57.3 last month, according to a closely watched survey from the Institute for Supply Management. That reflected a stronger rate of growth than in January, when the index hit 55.5. Economists were looking for the sector’s growth to slow in February to 54.9.
Economists have warned that Covid-19, the virus that first surfaced in China, the world’s second-largest economy, has become a drag on the outlook for global economic growth. A rebound in the US manufacturing sector cooled in February, as factory closures threw a wrench into supply chains
The services sector, which accounts for more than two-thirds of domestic economic activity, continued to show resilience. The ISM index was at its highest mark since February 2019.
Anthony Nieves, chair of the ISM non-manufacturing business survey committee, said most respondents expressed concern about the coronavirus and its supply chain impact, but “they do remain positive about business conditions and the overall economy”.
Capital Economics said the report “does underline that economic growth was gathering momentum before the coronavirus outbreak began in earnest”.
Sub-indices for new orders, employment and new export orders grew quicker month-to-month, while inventories and order backlogs showed growth after contracting in January.
