The vast U.S. services sector grew robustly in February, but the expansion slowed from the prior month's record and job creation remained sluggish, an industry survey showed on Wednesday. The Institute for Supply Management's non-manufacturing index fell to 60.8 in February from 65.7 in January, below Wall Street estimates of a dip to 63.0. A number above 50 indicates growth. "The one area of concern is the employment index, which moderated in the month, which suggests continued subdued job growth," said Sal Guatieri, senior economist at BMO Financial Group. The survey's employment index slipped in February to 52.7 from 53.4 in January, suggesting an improving but still murky labor picture. Growth in new orders moderated, with that index falling to 60.3 from 64.9. The services sector includes everything from restaurants and hotels to banks and airlines. Many economists believe that, given the migration of many manufacturing jobs abroad, the long-awaited revival of the U.S. labor market would have to take place in the service sector.
But job growth has remained persistently below trend, a tendency confirmed by the Federal Reserve's Beige Book report. It said employment grew only slowly in most areas of the country over the past two months amid overall economic growth that ranged from moderate to accelerating. Major stock indexes dipped after the services report but recovered early losses to up slightly. The bond market had little reaction to the lower-than-expected figures, and prices were mostly flat in late afternoon trade. In a ray of hope for frustrated job seekers, a survey of leading U.S. chief executives released on Wednesday showed 33 percent expect their companies to add jobs over the next six months, up from 25 percent when a similar survey was released in December. The poll from the Business Roundtable, the country's main association of CEOs, showed 45 percent expecting no change in employment at their companies while 22 percent expect jobs to decline over the next six months. Another report on Wednesday showed the buoyant U.S. housing sector has yet to run out of steam, with mortgage refinancing applications climbing last week to the highest level in seven months. The Mortgage Bankers Association said its seasonally adjusted refinancing index rose 5.1 percent to 3,532.2 from the previous week's 3,361.9. The weekly barometer of refinancing activity reached its highest level since it hit 4,047.5 for the week ended Aug. 1, 2003, when the 30-year mortgage rate averaged 6.37 percent. "Things keep percolating along. There are still people who can refinance," said MBA chief economist Douglas Duncan. Money freed up via mortgage refinancings, as homeowners cash out home equity or switch into lower-rate loans, has been vital in supporting consumer spending in an uneven recovery.//