The Institute for Supply Management (ISM) announced on Thursday that U.S. service sectors was expanding more slowly than expected in February. However, service sectors fared better than manufacturing.
ISM is the association of supply management which provide training, qualifications, publications, information, and research in the field of procurement and supply management. Founded in 1915 in United States as National Association of Purchasing Agents (NAPA) the organization was the oldest in the field of supply management. Up to now, ISM is registered as the largest organization in supply management with global outreach.
On Thursday, ISM announced that U.S. service sector expanded modestly in February, reassuring the strength of American consumers to counterbalance challenges from global economic slowdown. Although fell slightly from 53.5 to 53.4, but gauge of service sectors activity indicate the nonmanufacturing sector is still expanding. The reading is above expectation from economist which predicted the February index to register at 53.0, but still below 12-month average of 56.6, as Fox Business reported.
On the contrary in manufacturing sectors, global slowdown affected the manufacturers significantly
Although rose to 49.5 from 48.2 in January, but below 50 index showed cutback in manufacturing sector instead of expanding. According to Market Watch, manufacturers were down by a strong dollar, weak exports and fewer orders from a U.S. energy industry struggling with cheap oil prices.
An increase from previous month in manufacturing raised optimism, as a senior executive at a company that makes fabricated-metal parts told Market Watch, "Business has to get better. And it appears it is."
Index above 50 indicated the sectors is still expanding, as service sectors in U.S. has been growing continuously for 73 straight months. However, slowdown in service sectors indicated a contraction in the employment.
"Conditions are positive but employment is something to keep a sharp eye on," Chairman of ISM's Non-Manufacturing Business Survey Committee Anthony Nieves told Wall Street Journal. Mr. Nieves said a slowdown that previous month showed an indication of employment contracted for the first time in two years.
ISM also reported that employment subindex fell from 52.1 in January to 49.7, although many variable affected the reading, but it raised a concern ahead jobs report on Friday. According to ISM, service companies are able to quickly adjust employment to match economic conditions, unlike manufacturers. Moreover, in business activity subindex, there is a raise of 3.9 point to 57.8 from January, indicating orders are expanded and overseas demand remain positive.
Barclays economist Jesse Hurwitz commented, "Service sector activity rebounded strongly in February. It remains the primary growth engine for the U.S. economy."
Amidst global slowdown U.S. industry sector is still growing. As the Institute for Supply Management (ISM) announced on Thursday. Especially U.S. service sectors which stil expanded modestly.
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