By Xavier Fontdegloria

U.S. services activity growth eased in February but remained at robust levels amid an improvement of the public health situation and weather-related disruptions in the central part of the country.

The ISM Services Report on Business PMI decreased to 55.3 in February from 58.7 in January, data from a survey compiled by the Institute for Supply Management showed Wednesday.

Economists polled by The Wall Street Journal expected the reading to hold at 58.7, unchanged from the previous month. The reading is above the 50 point break-even point that separates expansion over contraction, posting the ninth straight month of growth but at a slower pace than that of January.

"There was a pullback in the rate of growth in the services sector in February," said Anthony Nieves, chair of the ISM Services Business Survey Committee.

Respondents are mostly optimistic about business recovery and the economy, but production-capacity constraints, material shortages and challenges in logistics and human resources are affecting the supply chain, he said.

The ISM services business activity index edged down to 55.5 from 59.9 in January, while the new orders index fell significantly to 51.9 from 61.8 the prior month.

The employment index fell to 52.7 from 55.2 in January, the report said.

The supplier deliveries index inched up three points to 60.8, and the prices index surged 7.6 points to 71.8.

"Suppliers are taking the opportunity with the commodity-price increases in the last few months to propose price increases that are above and beyond normal expectations, causing significant concern," one of the respondents from the accommodation and food services sector said.

The ISM services PMI also signaled that the U.S. overall economic activity continued to grow in February, as a reading above 48.5 over time generally indicates an expansion of the overall economy. This is the ninth straight month in which the PMI indicates such expansion.

Write to Xavier Fontdegloria at xavier.fontdegloria@wsj.com

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(END) Dow Jones Newswires

March 03, 2021 10:30 ET (15:30 GMT)

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