US service sector activity strengthened sharply in February, with the ISM Services PMI rising from 53.8 to 56.1, well above market expectations of 53.8, marking the highest level since July 2022. The data point to a broad-based acceleration in the services economy, which continues to be a key driver of overall US growth.
Underlying components showed strong momentum across demand and activity indicators. The Business Activity index climbed from 57.4 to 59.9, while New Orders surged from 53.1 to 58.6. Employment index also improved, rising from 50.3 to 51.8. Price pressures, however, eased slightly. Prices index declined from 66.6 to 63.0.
According to the ISM, the latest reading indicates the services sector is “heating up”, with key activity and order components reaching their strongest levels since 2024. Historically, a Services PMI of 56.1 corresponds to roughly a 2.5% annualized increase in US real GDP.
