(Kitco News) – The U.S. service sector improved beyond expectations last month, with all four major subindexes in expansionary territory and the headline reading delivering its highest print in nearly four years, according to the latest data from the Institute for Supply Management (ISM).
The ISM announced on Wednesday morning that its Services Purchasing Managers Index came in at 56.1 in February, up from January’s revised reading of 53.8. The data was better than expected, as economists were looking for a reading of 53.5. February’s reading represented the index’s 20th straight month of expansion after ISM’s most recent seasonal adjustments, and the highest print since the 56.5 in July of 2022.
Readings above 50 in such diffusion indexes signify economic growth and vice versa. The farther an indicator is above or below 50, the greater or smaller the rate of change.
Gold prices continued to trade near the middle of their daily range following the 10 am release. Spot gold last traded at $5,150.38 per ounce for a gain of 1.21% on the daily chart.
“February’s Services PMI features the third month in a row with all four subindexes being in expansion territory, similar to a period from December 2024 through February 2025,” said Steve Miller, Chair of the ISM Services Business Survey Committee. “Also, all 10 reported indexes were in expansion territory for the first time since March 2021. Further, eight of these indexes are on positive trends, with increases of as much as 11 percentage points over the last six months. The two indexes with negative trends over this time period are Prices, which has declined 6 percentage points, and Inventory Sentiment, which is down 0.4 percentage point. Although the Prices Index is still in expansion territory and in its longest streak above 60 percent since March 2023, February’s reading is its lowest in 11 months.”
“The services sector is heating up, with the Business Activity, New Orders, and New Export Orders indexes at their highest levels since 2024, and the Backlog of Orders Index with its best reading since July 2022 (58.3 percent),” he added. “The Supplier Deliveries Index is higher (and indicates slower deliveries) than its 12-month average, but the index has eased slightly since the previous month.”
Miller said respondents said gasoline was up in price for the first time since February 2025, and copper was up in price for the third month in a row. “Commentary on trade uncertainty increased, with respondents commenting that tariffs impacts have stabilized and are now embedded in supply chain costs,” he said. “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.”
