US service sector expands at fastest rate in a year

The US service sector expanded in February at its fastest rate in a year, underpinned by growth in hiring and a pickup in orders that helped service providers raise prices, a survey has indicated.

The Institute for Supply Management’s index of non-manufacturing activity climbed to 57.3 points, up from 56.8 in January, Bloomberg reported.

The services sector encompasses everything from banks and financial services to restaurants and hotels. Any reading above 50 means the sector is growing, and the January-February rise showed in the Tempe, Arizona-based ISM’s data was the highest rate of growth since February 2011, according to the BBC.

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While the group’s employment index dropped from its highest reading in six years, it stayed at a reading that suggests many service companies are still taking on staff, the Associated Press reports, confirming other data that shows service firms have increased hiring.

Measures of new orders and backlogged orders also expanded, the ISM said, supporting a big leap in prices to 68.4 percent from 63.5 percent in January, according to the Agence France Presse.

The three services sectors reporting business declines out of the 17 measured were retail sales, health care, and company management and support services.

Separate figures released on Monday by the Commerce Department showed that US factors orders fell by 1 percent in January, the biggest decline for 15 months, although this was attributed primarily to the conclusion of a one-year investment tax break. 

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