Service sector activity in the U.S. unexpectedly grew at a faster pace in the month of February, according to a report released by the Institute for Supply Management on Wednesday.
The ISM said its services PMI climbed to 56.1 in February from 53.8 in January, with a reading above 50 indicating growth. Economists had expected the index to edge down to 53.6.
With the unexpected increase, the services PMI reached its highest level since hitting 56.5 in July of 2022.
An accelerated pace of growth in new orders contributed to the advance by the headline index, as the new orders index jumped to 58.6 in February from 53.1 in January.
The business activity index also climbed to 59.9 in February from 57.4 in January, while the employment index rose to 51.8 in February from 50.3 in January.
The ISM said the supplier deliveries index edged down to 53.9 in February from 54.2 in January, but a reading above indicates slower deliveries, which is typical as the economy improves and customer demand increases.
The report also said the prices index slid to 63.0 in February from 66.6 in January, dropping to its lowest level since hitting 61.4 in March 2025.
“Commentary on trade uncertainty increased, with respondents commenting that tariffs impacts have stabilized and are now embedded in supply chain costs,” said Steve Miller, Chair of the ISM Services Business Survey Committee.
He added, “Although there were several comments on tariff uncertainty regarding the U.S. Supreme Court decision, there was no alarm regarding supply chain performance, suggesting that services companies have developed capabilities to routinely address shifts in tariff policies.”
On Monday, the ISM released a separate report showing a slight slowdown in the pace of growth in U.S. manufacturing activity in the month of February.
The ISM said its manufacturing PMI edged down to 52.4 in February after surging to 52.6 in January, but a reading above 50 still indicates growth. Economists had expected the index to dip to 51.8.
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