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US service industry shrinks again | US service industry shrinks again |
(10 minutes later) | |
The US service sector contracted less than analysts had expected in February, according to a survey from the Institute of Supply Management (ISM). | |
The ISM's index of service sector activity hit 49.3 last month, up from 44.6 in January. A figure of less than 50 indicates contraction. | |
Analysts had forecast 47.3 and the better-than-expected figure sent stocks up and strengthened the US dollar. | |
Services account for two-thirds of economic activity in the US. | |
'Relief' | |
The figure was greeted positively by the market after January's fall - which represented the first decline below 50 since 2003. | |
The data was "a big relief after January's number had been so incredibly weak", said Stephen Stanley, head economist at RBS Greenwich Capital Markets. | |
"While the level of activity still seems to be pretty bad, it feels like things have stabilised to some degree." | |
However, analysts highlight that the state of the world's largest economy remains uncertain. | |
Anthony Nieves, chairman of the ISM survey, said members' comments were mixed, suggesting they remained cautious about business conditions. | |
Separate figures released on Wednesday showed a mixed picture. | |
Factory orders dropped by 2.5% in January, marking the first fall since August, but in line with expectations, Commerce Department figures showed. | |
Meanwhile, US private sector employment unexpectedly dropped in February for the first time in five years, according to a private report by ADP. |
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