Economic Signs Pointing to End of U.S. Recession

The biggest part of the U.S. economy expanded in February at the fastest pace in 15 months, an industry survey showed.

The Institute for Supply Management’s index of service companies, builders and other non-manufacturing companies rose more than expected. That adds to reports of factory growth for the first time in 19 months, a rise in construction and increases in income and spending that show the economy is rebounding from the recession that began last March.

“We were looking for a single, but we got a home run,” said Scott Brown, an economist at Raymond James & Associates in St. Petersburg, Fla. The services index has risen to “the kind of level that we were seeing a couple of years ago when the economy was booming.”

The institute’s index of nonmanufacturing business, which accounts for about four-fifths of the U.S. economy, rose to 58.7 from 49.6 in January. A reading above 50 signals expansion, and the index hasn’t been this high since November 2000. Analysts on average had expected it to rise to 51.

Orders at service companies also were the highest in 15 months, reflecting rising sales at retailers. The new-orders index rose to 57.3 in February, the highest since November 2000, from 49.4 in January. Nonmanufacturing inventories increased for the first time since October 2000. Export orders rose for a third straight month, Tuesday’s report showed.

The institute’s index of prices paid, a measure of costs for purchased materials and services, rose to 50 from 49. Costs increased for construction, health services and real estate.

A separate report showed the number of job cuts planned by U.S. employers dropped in February to the lowest level in eight months. Businesses announced plans to eliminate 128,155 positions, down 40% from a month earlier, according to the job-placement firm Challenger, Gray & Christmas Inc.