US Services Activity Expands Most Since 2022 on Demand

Shoppers in the SoHo neighborhood of New York, US, on Friday, Feb. 13, 2026. The US Census Bureau is scheduled to release advance monthly sales for retail and food services figures on February 17. Photo by Michael Nagle /Bloomberg

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(Bloomberg) — The US service economy expanded in February at the fastest pace since mid-2022, powered by robust orders growth and business activity.

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The Institute for Supply Management’s services index rose 2.3 points to 56.1, the group said Wednesday. Readings above 50 indicate expansion, and the figure exceeded all projections in a Bloomberg survey of economists.

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The survey highlighted a broad strengthening in the largest part of the economy prior to the US-Israeli attacks on Iran. Healthier demand helped boost services employment, which saw the firmest growth in a year.

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Separate data out Wednesday showed US companies added 63,000 jobs last month, the most since July.

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Fourteen service industries reported growth in February, led by mining, information and real estate. Three contracted.

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“The US economy is off to a decent start and its resilience should help it overcome turbulence from the Iran war, barring an extreme scenario for energy prices,” Sal Guatieri, senior economist at BMO Capital Markets, said in a note.

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The ISM measure of new orders climbed to a more than one-year high of 58.6. A third of service providers reported higher bookings, the largest share in three years.

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Export demand also strengthened notably. Business activity, which parallels the group’s factory output index, registered the fastest growth since May 2024.

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On Monday, ISM data showed a second month of expanding manufacturing activity. A measure of order backlogs at service providers jumped an unprecedented 11.9 points to an almost four-year high.

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Unlike the ISM manufacturing survey, which showed that input prices soared at the fastest pace since 2022, inflationary pressures cooled at service providers. The index of prices paid for services and materials fell to an almost one-year low.

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Select ISM Industry Comments

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“Our industry seems to have adapted to the tariffs. The costs are embedded into the import cost the company has to shoulder.” — Agriculture, Forestry, Fishing & Hunting

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“Residential homebuilding continues to lag due to affordability and interest rate issues. While we saw improved sales last month due to further discounts, we struggled to achieve similar results in February.” — Construction

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“Tariff volatility and shifting bilateral trade agreements are materially impacting our purchasing operations. Changes in U.S. semiconductor supply constraints continue to pressure component pricing and availability. “ — Mining

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“The business climate remains solid overall, but significant unknown risks from further potential tariff actions by the US government are dampening business investment.” — Real Estate, Rental & Leasing

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“Due to random-access memory shortages, we are seeing increased cost and lead times from key technology providers.” — Retail Trade

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“Overall, our business performance in January and February has been solid (minus some winter storm hurdles). Our upstream oil and gas business has stalled for two years and is not supporting our growth. On the other hand, all data center-related activity continues to grow substantially.” — Wholesale Trade

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Meanwhile, the group’s inventories measure showed the fastest growth since October 2024.

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(Adds graphic, economist’s comment)

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