The largest contributor to US economic growth just had its strongest month in nearly a year

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The US services sector, which makes up the largest part of the overall economy, was stronger than expected in February, according to the Institute of Supply Management.

The non-manufacturing purchasing managers’ index rose to 57.6, the highest since April 2015, from 56.5 in January. It had been forecast to be unchanged.

A reading above 50 shows that the sector remained in expansion.

The recent improvement in both services and manufacturing indicators suggests that business investment may be on the rise again after a slowdown.

Labour-market tightness and strong business conditions since the start of the year were among the comments that survey respondents made to ISM. Other indicators of business confidence have shown a spike in optimism since the election, as executives anticipate corporate tax cuts.

Markit Economics’ separate survey released on Friday showed that service providers’ outstanding business fell for the first time in three months.

Markit’s PMI fell to 54.1, revised downwards from a flash reading of 54.3.

“The burning question is whether the February slowdown merely represents some payback after a strong start to the year for US businesses, or whether it’s the start of a more entrenched slowdown,” said Chris Williamson, chief business economist at IHS Markit.

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