By Colin Kellaher

Services activity in the middle of the U.S. continued to expand in February, albeit at a slower rate, and expectations for future growth rose, according to a monthly survey by the Federal Reserve Bank of Kansas City.

The Tenth District Services Survey's composite index, a weighted average of indexes covering revenue/sales, employment and inventory, slipped to 6 in February from a reading of 14 in January.

The Kansas City Fed said expectations for future services activity fell to 23 in February from 28 in January.

Some firms surveyed noted negative effects from recent global developments, including the coronavirus epidemic and ripple effects from the grounding of Boeing Co.'s 737 MAX airplane, said bank economist Chad Wilkerson.

More than a third of respondents reported negative effects from coronavirus in February, and nearly 44% of businesses said they expect the epidemic will weigh on operations over the rest of 2020.

The Kansas City Fed's survey includes participants from such service industries as retail and wholesale trade, automobile dealers, real estate and restaurants. The survey provides information on current services activity in the Tenth District, which includes Colorado, Oklahoma, Wyoming, Nebraska, Kansas, the northern half of New Mexico and the western third of Missouri.

The bank's monthly manufacturing survey, released Thursday, showed that factory activity in the region expanded modestly from a month ago, though more than half of respondents said they expect negative effects from the coronavirus for the rest of the year.

Write to Colin Kellaher at colin.kellaher@wsj.com

(END) Dow Jones Newswires

February 28, 2020 11:40 ET (16:40 GMT)

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