The Institute for Supply Management (ISM) announced on Tuesday its non-manufacturing index (NMI) came in at 59.7 in February, which was 3.0 percentage points higher than the January reading of 56.7 percent. This pointed to the strongest expansion in the services sector in three months.

Economists forecast the index to increase to 57.3 last month. A reading above 50 signals expansion, while a reading below 50 indicates contraction. 

All 18 non-manufacturing industries reported growth in February, the ISM said. 

According to the report, the ISM’s non-manufacturing business activity measure increased to 64.7 percent, 5 percentage points higher than the January reading. That reflected growth for the 115th consecutive month, at a faster pace in February. The new orders gauge surged by 7.5 percentage points to 65.2 percent. Meanwhile, the employment indicator declined 2.6 percentage points in February to 55.2 percent.

Commenting on the data, the Chair of the ISM Non-Manufacturing Business Survey Committee, Anthony Nieves, noted, "The past relationship between the NMI and the overall economy indicates that the NMI for February (59.7 percent) corresponds to a 3.9-percent increase in real gross domestic product (GDP) on an annualized basis."