Getty Images
The service side of the U.S. economy perked up in February in a good sign.
The numbers: Companies on the service side of the economy that employ the vast majority of American workers grew in February at the fastest pace in three months, the first sign that U.S. growth might be picking up after an early-year lull.
The Institute for Supply Management’s survey of senior executives at banks, retailers, restaurants and the like rose to 59.7% last month from 56.7% in January. The January reading was the weakest since last summer.
Numbers over 50% are viewed as positive for the economy, and anything over 55% is considered exceptional.
What happened: The index for production and new orders both rose sharply to finish around 65, an exceptionally high reading.
Hiring appeared to slow, however. The employment gauge fell 2.6 points to a still-healthy 55.2 .
All 18 of the industries tracked by the ISM said business expanded in February.
Read: Small-town U.S.A. falls further behind urban America in job opportunities
Big picture: The economy slowed toward the end of 2018 and started off the new year sluggishly, partly because of festering trade tensions with China. Many executives say the dispute has hurt business, though they expect it will resolved soon.
Economists polled by MarketWatch predict gross domestic product will taper to 1.5% in the first quarter from 2.6% in the final three months of 2018.
The slowdown is likely to temporary, though, expecially if the U.S. and China strike a deal. The economy has also generally been strongest in the spring since an expansion got underway almost 10 years ago.
Growth is expected to pick up in the second quarter and the latest ISM reading might be a sign that a spring thaw is already under way.
Read: Economy slows to 2.6% in fourth quarter, GDP shows, but it still shows lots of muscle
What they are saying?: “We are anxiously awaiting decisions in the next couple of weeks on the fate of the proposed tariffs on China,” said an executive at restaurant chain.
“Business continues to stay steady, with little drop off,” added an executive at a management-support firm. “We are more concerned about tariffs in the short term, since there seems to be no agreement. However, we do believe it will be a short-lived issue.”
Market reaction: The Dow Jones Industrial Average DJIA, -0.14% and S&P 500 SPX, -0.17% fell in Tuesday trades for the second day in a row, but the losses declined after the ISM report.
The 10-year Treasury yield TMUBMUSD10Y, +0.60% was unchanged at 2.73%.
