Service sector grows at fastest pace in a year

The nation's service sector expanded unexpectedly in February at the fastest pace in a year, according to a report released Monday. 

The Institute for Supply Management's index of non-manufacturing activity increased to 57.3 percent, up from January's 56.8, the highest level since February 2011 and the 26th straight month of growth.  

A reading above 50 reflects expansion.

Meanwhile, the business activity index rose to 62.6 percent from 59.5 percent, and new orders expanded to 61.2 percent from 59.4 percent, also the highest point in a year. 

Although the employment index decreased by 1.7 percentage points to 55.7 percent, indicating a slower rate of growth, businesses are still showing a willingness to hire. 

The service sector added 176,000 jobs in January — the government's February report is set for release on Friday — and employs 90 percent of all workers, including those working at restaurants, hotels and retailers. 

That figure includes an addition of 44,000 jobs in leisure and hospitality, primarily in food services such as restaurants and bars, which added 33,000 jobs.

Since a recent low in February 2010, the food-services sector has added 487,000 jobs.

Meanwhile, the manufacturing sector, which has led the economic recovery, added 50,000 jobs in January. 

Trends in those sectors will need to continue to help the labor market and the broader economy bounce back from the downturn.

Economists are expecting good news in February's job numbers. 

Yet, at the same time, they aren't expecting unemployment to drop below 8 percent this year. 

The ISM report showed prices increased to 68.4 percent, up 4.9 percentage points, indicating a faster rate in February.