Service Sector Activity Picks Up

by: Calafia Beach Pundit


The February ISM service sector surveys were stronger than expected, and this marks yet one more in an impressive series of indicators that are all pointing to a meaningful acceleration in economic activity. This recovery is real, it has legs, and it is still in its early stages. The manufacturing surveys reported earlier this week were very strong, and now we see the much larger service sector also registering significant improvement.


If there is any unpleasant news, it is that both the manufacturing and the service sector surveys are reporting rising prices. This is good in one sense, since it means that demand is picking up, but it also reflects higher commodity prices—which likely reflect the impact of a very weak dollar and thus portend rising inflation pressures.