Positive ISM services surprises, but respondents worried by tariffs
Services sector activity in the US experienced a modest acceleration last month, the results of a closely followed survey revealed.
The Institute for Supply Management's services sector Purchasing Managers' Index improved from a reading of 52.8 for the month of January to 53.5 for February (consensus: 52.6).
But participants' answers highlighted the ongoing concern and uncertainty regarding the potential impact of the new US administration's tariff policies.
Hence the risk that companies and consumers might be bringing forward some of their spending in order to try and get ahead of the new levies.
Worth nothing, a sub-index for the prices paid by firms increased from 60.4 to 62.6.
So did subindices for new orders and employment, with increases from 51.3 to 52.2 and from 52.3 to 53.9, respectively.
Commenting on the latest numbers, Thomas Ryan at Capital Economics said: "After the slew of weaker activity and survey data in recent weeks, the small rise in the ISM services index in February should provide some reassurance that the floor is not falling from under the economy.
"[...] The worrying takeaway for the Fed is that the prices paid index climbed 2.2-points to 62.6, leaving it consistent with core PCE inflation remaining stuck above 3%. As was the case in the manufacturing survey, some comments from firms in the press release attributed this to prices for inputs rising in anticipation of new country- and product- specific tariffs."