Less Growth Prompts First Service Job Cuts Since 2014
Daniel Acker/Bloomberg News
Growth in U.S. service industries slowed for a fourth straight month in February, prompting the first job cuts in two years.
The Institute for Supply Management’s nonmanufacturing index eased to 53.4 from 53.5 in January, the Tempe, Arizona-based group’s report showed March 3.
While readings above 50 signal expansion, the gauge has posted slower growth since November. The group’s employment measure dipped below the expansion threshold for the first time since February 2014.
Service industries, which range from construction to finance, account for the lion’s share of the economy, and a slowdown risks taking a bigger bite out of growth than the slump in manufacturing. Continued job growth and signs that the recovery remains on track despite market volatility will be needed to persuade consumers to keep spending.
“We’re continuing on the path of growth; it just may be slowing ever so slightly,” said Anthony Nieves, chairman of the ISM nonmanufacturing survey, said on a conference call after the release. “You don’t want to get overly concerned until you see a long trend and we start seeing contraction across these indexes.”
Fourteen of the 18 industries surveyed expanded last month, paced by hotels and restaurants and management companies.
The median forecast of 77 economists surveyed by Bloomberg News called for 53.1. Estimates ranged from 51 to 55.
ISM’s factory survey released March 1 indicated the decline in manufacturing had found a bottom. The index rose for a second month, reaching 49.5 in February from 48.2 the prior month.
Details from the service survey showed the employment index declined to 49.7 from 52.1 in January, indicating companies last month started cutting staff, perhaps in response to the turmoil in financial markets. The drop could color economists’ expectations ahead of the February jobs report, which comes out March 4.
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|By Victoria Stilwell|
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