Service Industries in U.S. Grow at Slowest Pace Since 2010

Source: Bloomberg

By Michelle Jamrisko Mar 5, 2014 11:07 AM ET

Service industries in the U.S. expanded in February at the slowest pace in four years, reflecting a plunge in hiring that shows the biggest part of the economy is struggling as harsher weather weighs on consumers and businesses.

The Institute for Supply Management’s non-manufacturing index fell to 51.6 last month, lower than any forecast of economists surveyed by Bloomberg and the weakest since February 2010, from January’s 54, the Tempe, Arizona-based group said today. A gauge above 50 shows expansion. The median estimate in a Bloomberg survey of economists was 53.5.

Scant momentum in the pace of hiring, limited income gains and rising mortgage rates are holding back consumers while unusually severe weather also limited retail sales and factory activity earlier this year. More progress in the housing market and faster job gains might be needed to propel the expansion in the first half of 2014.

“The weather really affected a lot of the economic data throughout January and February,” said Thomas Simons, an economist at Jefferies LLC in New York, whose forecast of 52 for the ISM gauge tied as the lowest in the Bloomberg survey. “It’s probably appropriate to have pretty muted expectations for payrolls this month,” especially considering that the survey week included the harshest conditions for the month, he said.

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