The US February ISM services index rose to 56.1, the largest increase since 2022, with new orders and employment rising simultaneously.

In February, the US service industry achieved its fastest expansion since mid-2022, driven by strong new orders and business activity, pushing growth in this largest sector of the US economy. Data released by the Institute for Supply Management (ISM) on Wednesday showed that the service industry index rose 2.3 points to 56.1 in February, above the 50 point mark indicating expansion and far exceeding economists' expectations in media surveys, indicating a significant acceleration in service sector activity. The survey reflected signs of broad strengthening in US economic demand before the US and Israel launched air strikes on Iran. The rebound in demand also led to job growth in the service industry. The report showed that the service industry employment index recorded its strongest growth in the past year. Meanwhile, another data released on Wednesday showed that US businesses added 63,000 new jobs in February, the highest since July last year. By industry, there were 14 service industries that saw growth in February, with mining, information, and real estate industries showing the strongest performance; while 3 industries saw contraction. Sub-indexes showed that the ISM new orders index rose to 58.6, reaching a new high in over a year, and export demand also significantly increased. The business activity index recorded its fastest growth rate since May 2024. Previously released ISM manufacturing data showed that US manufacturing activity has expanded for two consecutive months, while the service sector's order backlog index jumped significantly by 11.9 points to reach near the highest level in nearly four years, marking the largest monthly increase in history. However, in contrast to manufacturing, the service sector has seen some easing in inflation pressures. The ISM service industry price index fell to near its lowest level in a year, while the manufacturing survey showed that input costs have risen at the fastest rate since 2022. Business feedback from the survey shows that some industries have gradually adapted to cost changes brought about by tariff policies. For example, the agricultural industry stated that import tariff costs have been incorporated into business procurement costs; mining companies pointed out that US semiconductor supply restrictions and trade policy changes still impact procurement and costs. Real estate industry businesses stated that the overall business environment remains robust but uncertainties surrounding potential tariff policies are dampening investment willingness. Retail businesses also reported that the cost and delivery cycles of technology suppliers are increasing due to a shortage of RAM. Wholesale industry businesses noted that despite stagnation in upstream oil and gas operations in recent years, demand for data center-related services remains strong. In addition, the ISM inventory index also showed a significant increase, reaching the fastest pace since October 2024, reflecting businesses stocking up early for future demand growth.