US services companies grow in February

WASHINGTON (AP) — Services companies grew at a faster pace in February than the previous month, an indication that the economy was still expanding immediately after the first cases of the coronavirus were reported in the U.S.

The Institute for Supply Management said Wednesday that its service-sector index rose to 57.3 from 55.5 in January. Any reading above 50 signals an expansion. The index covers retail, health care, hotels and restaurants, and professional services, among other sectors.

Services companies added jobs at a faster pace last month than in January while business activity declined, according the survey. Strong consumer spending, a healthy job market and decent pay gains are driving a healthy service sector and broader economy, but businesses have been cutting sales an profit expectations as the coronavirus outbreak spreads.

“Most respondents are concerned about the coronavirus and its supply chain impact,” said Anthony Nieves, the Chair of the ISM Non-Manufacturing Business Survey Committee. “They also continue to have difficulty with labor resources. They do remain positive about business conditions and the overall economy.”

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Thirteen out of 16 industries reported sales growth in February, including accomodation and food services, rental and leasing and transportation and warehousing. Hotels and other travel-related businesses could be hit hard in the coming months as companies cancel business trips and other non-essential travel due to the virus outbreak.

“People are definitely curtailing travel, especially abroad,” Nieves said. “Hotels will definitely feel it” if the situation worsens in the U.S., Nieves said. He also stressed that February’s numbers were “great,” including new orders, which increased 6.9% over the previous month.

“Unless something derails this, I expect continued growth without interruption,” he said.

A separate survey this week of manufacturers by the ISM showed that American factories expanded in February for the second straight month, despite disruptions caused by the coronavirus outbreak.

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