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The numbers: A barometer of business conditions at service-style companies such as hotels and hospitals held steady at a robust 55.1% in February, showing the U.S. economy is still in expansion mode as even headwinds pick up.
Numbers above 50% are a positive sign. The closely followed ISM reports are the first major indicators of each month to offer clues on how well the economy is performing.
Economists polled by The Wall Street Journal had expected the index to drop to 54% from 55.2% in January. The report is produced by the Institute for Supply Management.
The snapshot of the economy provided by the service-sector index has held up better than a similar ISM survey of manufacturers that showed weaker business conditions.
Service companies make up the bulk of all U.S. businesses, however, and employ the vast majority of Americans.
Big picture: The large service side of the economy indicates the U.S. is still on solid footing.
Yet the Federal Reserve plans to raise interest rates even higher to squash inflation, putting the economy at risk of recession.
What’s become both a source of strength and angst is the tightest labor market in decades.
Feeling secure in their jobs, Americans continue to spend enough to keep the economy out of recession. But rising wages also threaten to keep inflation high and force the Fed to raise rates even more.
Market reaction: The Dow Jones Industrial Average
DJIA,
and S&P 500
SPX,
rose in Friday trades.
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