The pace of growth in the U.S. services sector unexpectedly picked up in February to its highest level in a year, according to an industry report released on Monday.
The Institute for Supply Management said its services index rose to 57.3 last month from 56.8 in January. The reading topped economists' forecasts for 56.1, according to a Reuters survey.
It was the highest level since February of last year. A reading above 50 indicates expansion in the sector.
In other economic news, businesses sharply reduced orders for machinery and other core capital goods in January after a tax credit expired, pushing U.S. factory orders down by the largest amount in 15 months.
Even with the decrease, orders are near pre-recession levels.
The Commerce Department says factory orders fell 1 percent in January. Investment in a category considered a proxy for business investment fell 3.9 percent, the biggest decline in a year. This followed a big increase in December, the final month businesses could take advantage of a one-year investment tax break.
Orders totaled $462.6 billion in January, 37.7 percent above the recession low hit in March 2009 and only 4.6 percent below the previous orders peak set in June 2008. Manufacturing has been one of the bright spots in the recovery.
The Associated Press and Reuters contributed to this report.