Service industries in the U.S. expanded in February at the slowest pace in four years, showing the biggest part of the economy was struggling as harsher weather weighed on consumers and businesses.
The Institute for Supply Management’s non-manufacturing index fell to 51.6 last month, lower than any forecast of economists surveyed by Bloomberg and the weakest since February 2010, from January’s 54, the Tempe, Arizona-based group said. A gauge above 50 shows expansion. The median estimate in a Bloomberg survey of economists was 53.5.
Scant momentum in the pace of hiring, limited income gains and rising mortgage rates are holding back consumers while unusually severe weather also limited retail sales and factory activity earlier this year. More progress in the housing market and faster job gains might be needed to propel the expansion in the first half of 2014.
“There’s a moderate underlying growth, but it’s being slowed a bit by the bad weather,” David Sloan, senior economist at 4Cast Inc. in New York, said before the report. “We’ll need to see employment growth gaining momentum after its subdued recent couple of months” in order to help boost the services sector, he said.
Estimates of the 79 economists in the Bloomberg survey ranged from 52 to 55. From July 2009, a month after the last recession ended, through January, the index averaged 53.9.
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