WASHINGTON—A private survey says the growth of U.S. services companies in February slowed to the worst pace in two years, as a measure of hiring turned negative.
The Institute for Supply Management said Thursday that its services index slipped to 53.4 last month from 53.5 in January. February’s reading was the lowest since February 2014.
Still, any reading above 50 signals that services firms are expanding. The survey showed continued but slower growth for new orders, while the pace of business activity improved.
But the employment component was 49.7, which signals contraction. This could raise a red flag ahead of the government jobs report being released Friday, with experts projecting that employers hired nearly 200,000 workers last month.
U.S. economic growth increasingly hinges on consumers, as uncertainty about global growth has hampered manufacturing and exports. Home and auto sales have steadily advanced over the past year, while spending at restaurants has also improved. Those gains have spread to hiring as businesses in the services sector account for 90 percent of the 2.7 million jobs added in the past 12 months.
“We’re continuing on the path of growth,” said Anthony Nieves, chair of the ISM non-manufacturing business survey committee.
But Nieves cautioned that it would be worth monitoring the index’s employment measure going forward.
“Where the concern might be is if we see this trend continue for the next two or three months,” he said.
The ISM is a trade group of purchasing managers. Its services survey covers businesses that employ the vast majority of workers, including retail, construction, health care and financial services companies.
The survey found that most service sectors are expanding, although it noted that retail, entertainment and mining contracted last month.
