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Winter Weather Slows Down US Service Economy: ISM

H.S. Borji
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Winter Weather Slows Down US Service Economy: ISM

The US service economy expanded at the slowest pace in four years, as bad weather disrupted the flow of business and pace of hiring.

The Institute for Supply Management’s gauge of national services activity decreased from 54 to 51.6 in February. A consensus of economists surveyed by Reuters called for 53.5. Despite the decline, February marked the 49th consecutive month the service economy expanded.

Ten of 18 non-manufacturing industries expanded last month, led by other services, management of companies and support services, public administration and agriculture. Of the eight industries that declined in February, mining was the hardest hit, followed by entertainment and recreation, real estate, and rental and leasing.

Employment activity unexpectedly fell for the first time in more than two years, with eight industries reporting a reduction in workers. Among them, mining experienced the biggest drop, followed by accommodation, healthcare, and arts and entertainment. The report raises questions about the latest employment estimate from the ADP Institute, which showed today that services employment increased by 120,000 last month.

“Economy is still plugging along, but at a very slow rate of growth,” said one manager from the professional, scientific and technical services industry.

“Cold winter weather has had a major affect on us when compared to year-over-year,” said another from wholesale trade.

Severe weather has gripped the US economy this winter, driving down business activity and consumer spending. Colder temperatures and snowstorms have weighed on job growth for the past three months. ADP’s latest report suggests the US economy added 139,000 payrolls last month. Official nonfarm payroll numbers will be made available by the Labor Department Friday.

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