WASHINGTON — US Services Sector Hits 3.5 Year High in 2026 as economic activity across American service industries expanded at the fastest pace in more than three years, according to new data from the Institute for Supply Management. The February reading signals continued strength in the largest segment of the U.S. economy, including industries such as finance, health care, transportation, hospitality, and professional services.
The latest monthly report from the Institute for Supply Management (ISM) showed that its non-manufacturing Purchasing Managers’ Index rose to 56.1 in February, up from 53.8 in January. A reading above 50 indicates expansion in the services sector. The February figure therefore represents a significant improvement in business conditions across service-based industries in the United States.
The services PMI survey measures economic activity across multiple sectors that together account for the majority of U.S. employment and output. Purchasing and supply executives across the country participate in the survey, providing insight into trends such as new orders, business activity, supplier deliveries, and employment conditions.
The February data showed broad-based improvement in several core components of the index. Business activity, a measure of overall production and service delivery, increased during the reporting period. New orders, which reflect demand for services from businesses and consumers, also strengthened. These indicators collectively contributed to the highest services sector expansion reading in more than three and a half years.
According to the survey results published by the Institute for Supply Management (ISM), the business activity index rose to 59.9, indicating stronger operational output among participating companies. At the same time, the new orders index increased to 58.6, reflecting increased demand across service industries. Both readings signal expanding activity within companies that provide services throughout the U.S. economy.
The services sector represents more than two-thirds of the overall U.S. economy. Because of its size, changes in services sector activity often influence the broader economic outlook. Growth in industries such as financial services, logistics, professional consulting, and health care contributes significantly to employment levels and consumer spending.
Employment indicators also improved during the February survey period. The employment index rose to 51.8, showing that businesses expanded hiring activity to support growing demand for services. Hiring trends within the services sector are closely monitored because they offer insight into labor market conditions across a wide range of industries.
Strong performance in service industries has played a central role in maintaining economic stability in the United States. Businesses operating in sectors such as hospitality, technology services, transportation, and retail services continue to benefit from steady consumer and business demand.
Reporting on the latest data, Reuters noted that the February reading marked the fastest expansion in services activity in more than three and a half years. The news agency reported that the increase in the services PMI exceeded economists’ expectations and reflected strong demand conditions across service industries.
According to the Reuters report, improved readings were also observed in several supporting components of the survey, including new orders and employment indicators. Rising demand for services contributed to stronger business activity and increased operational workloads for companies participating in the survey.
The ISM survey gathers monthly responses from purchasing managers and supply executives representing a wide range of service industries across the country. Their responses provide a real-time snapshot of economic conditions within companies responsible for delivering services to consumers and businesses.
Services sector activity is widely considered a key indicator of overall economic performance in the United States. When the index remains above the 50 level, it indicates that businesses are expanding operations and demand for services is increasing.
The February report demonstrates that service industries remain a primary driver of economic activity. Increased business volumes, expanding demand, and stronger employment conditions all contributed to the latest improvement in the PMI reading.
Economic data from the services sector is closely monitored by policymakers, financial markets, and business leaders because it provides insight into trends affecting the largest segment of the U.S. economy. Monthly PMI reports often serve as early indicators of changes in economic momentum.
The February reading highlights the continued resilience of service industries across the country. Stronger activity in sectors ranging from professional services to transportation indicates that businesses are experiencing steady operational demand.
The improvement in the PMI reading follows several months of moderate expansion in services activity. The latest report shows that economic conditions strengthened further as demand increased and businesses adjusted operations to accommodate higher workloads.
Services sector performance also plays a role in supporting employment opportunities across the United States. Because service industries employ millions of workers, expansion in this sector contributes to broader labor market stability.
The February data therefore provides additional evidence that service-based industries remain a key engine of economic activity. Continued expansion in business operations and new orders signals sustained demand for services throughout the country.
As the largest segment of the U.S. economy, the services sector will remain a central focus for economists and policymakers monitoring economic performance. Monthly PMI reports will continue to provide insight into the pace of activity across industries that shape national economic trends.
The latest reading reinforces the role of service industries as a foundation of economic growth. With demand expanding and businesses increasing operations, the services sector continues to reflect the underlying strength of the U.S. economy.
Frequently Asked Questions
What is the U.S. services sector PMI?
The services sector PMI is a monthly economic index published by the Institute for Supply Management that measures business activity across service industries.
What does a PMI reading above 50 indicate?
A reading above 50 indicates that economic activity in the sector is expanding compared with the previous month.
What was the services PMI reading for February 2026?
The February reading reached 56.1, up from 53.8 in January.
Why is the services sector important to the U.S. economy?
Service industries represent more than two-thirds of U.S. economic output and employ millions of workers across multiple sectors.
Which organizations reported the latest services sector data?
The data was published by the Institute for Supply Management and reported by Reuters.