The US services sector index reached its highest level in four years, driven by a boom in artificial intelligence investment.
The Institute for Supply Management (ISM) reported Wednesday that the February services Purchasing Managers' Index (PMI) came in at 56.1, up 2.3 points from January's 53.8. This marks the highest reading since July 2022, when the index stood at 56.5.
ISM noted the overall US economy has maintained expansion for 69 consecutive months through February. The services sector has remained in expansion territory for 20 straight months. A PMI reading above 50 indicates economic expansion, while below 50 signals contraction.
Among the components, the business activity index rose 2.5 points from January's 57.4 to 59.9. The new orders index jumped 5.5 points to 58.6 from 53.1 in January. The employment index edged up 1.5 points to 51.8 from 50.3, while the prices index fell 3.6 points to 63.0. The inventories index surged 11.3 points to 56.4 from 45.1 in January.
"Economic activity in the services sector continued to expand in February," said Steve Miller, chair of the ISM Services Business Survey Committee. "The business activity index is rising at a rapid pace."
S&P Global's final February services PMI reading came in at 51.7, down from January's 52.3, presenting a somewhat different picture from the ISM survey.
"The February PMI survey results reflect increasingly difficult trading conditions for businesses this year," said Chris Williamson, chief business economist at S&P Global Market Intelligence. "Services activity recorded its weakest growth in 10 months as demand growth slowed in both domestic and export markets, compounded by adverse weather across several states."