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Activity in the services sector continued to accelerate during the month of February as the ISM Non-Manufacturing report rose from 56.5 up to 57.6 and ahead of expectations for a reading of 56.5.  February’s reading was the third m/m increase in the last four months, taking the index to its highest level since October 2015.  On a combined basis and accounting for each sector’s weight in the overall economy, the ISM reading for February also came in at 57.6, which was the best reading since August 2015.

030317 ISM SVCS Chart

The table below breaks down this month’s ISM Non Manufacturing report by each of the index’s components.  On both a m/m and a y/y basis, breadth in this month’s report was solid.  In this month’s report, all ten categories moved back into growth mode (>50) with the biggest m/m increases coming in Export Orders, Inventories, and Backlog Orders.  To the downside, Import Orders, Supplier Deliveries, and Prices all declined relative to January.  On a y/y basis, Prices Paid is up the most of any components, followed by Business Activity, New Orders.

030317 ISM SVCS Table

Of all the categories included in the ISM Non Manufacturing report, Business Activity was one of the most notable.  As shown in the chart below, that component rose to its highest level since February 2011, breaking the trend of lower highs that has been in place since 2004.

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030317 ISM SVCS Chart Business Activity

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