The U.S. services sector grew robustly in February but the expansion slowed from the prior month's record, an industry survey showed on Wednesday.
The Institute for Supply Management's non-manufacturing index fell to 60.8 in February from 65.7 in January, short of Wall Street estimates of a dip to 63.0. A number above 50 indicates growth.
"The one area of concern is the employment index which moderated in the month, which suggests continued subdued job growth," said Sal Guatieri, senior economist at BMO Financial Group.
The survey's employment index slipped in February to 52.7 from 53.4 in January, suggesting an improving but still sluggish labor picture. Growth in new orders eased, with that index edging lower to 60.3 from 64.9.
The services sector includes everything from restaurants and hotels to banks and airlines.
Many economists believe that, given the migration of many manufacturing jobs abroad, a long-awaited revival of the U.S. labor market will have to take place in the service sector.
Major stock indexes were lower after the services report, with the Nasdaq composite down 0.55 percent. The bond market had little reaction to the lower-than-expected figures.
A separate report on Wednesday showed the buoyant U.S. housing sector has yet to run out of steam, with mortgage refinancings climbing last week to their highest level in seven months.
The Mortgage Bankers Association said its seasonally adjusted refinancing index increased 5.1 percent to 3,532.2 from the previous week's 3,361.9. This weekly barometer of refinancing activity reached its highest level since it hit 4,047.5 for the week ending Aug. 1, 2003 when the average 30-year mortgage rates averaged 6.37 percent.
"Things keep percolating along. There are still people who can refinance," said MBA chief economist Douglas Duncan.
Money from refinancings, which result from homeowners either cashing out home equity or switching into lower-rate loans, has been vital in supporting consumer spending in an uneven U.S. economic recovery.
