Service-sector activity is key to economy’s health

The February employment report highlights a light week of economic news. While the number of job gains, as usual, will likely grab the headlines, economists and investors will also be keenly focused on wage growth.

On Monday, the Institute for Supply Management releases its index of service-sector activity for February. The reading is a key barometer of the economy’s health because services make up about 80% of economic activity. Economists expect a slight pullback for last month.

On Friday, the Labor Department releases its closely-watched jobs report. Job gains averaged 200,000 in January. Economists expect another gain of 200,000 jobs for February.

Annual wage growth picked up sharply in January to 2.9% from 2.5%. Nomura economist Lewis Alexander expects some moderation in February that reduces the average annual pay increase to 2.8%.