March 3 (Bloomberg) -- Business at service companies probably expanded at a stepped-up pace in February, a sign the biggest part of the U.S. economy gained momentum, economists said in advance of today's industry report.

The Institute for Supply Management's index of financial services, construction, retail and other non-manufacturing enterprises most likely rose to 60.0 in February from 59.2 the month before, according to the median estimate in a Bloomberg survey of 55 economists. The institute, based in Tempe, Arizona, issues the report at 10 a.m. Washington time.

Readings higher than 50 indicate expansion, and the average of 62.5 in 2004 was a record. Services, which account for about four-fifths of the U.S. economy and most new jobs generated, are likely to support growth this year, economists say.

``Ongoing momentum in the economy should continue to provide for strength in the report,'' said Michael Englund, chief economist at Action Economics LLC, in Boulder, Colorado. ``While the peak acceleration in growth is likely behind us, this survey should remain at a solid level well into 2005.''

In other reports today, the Labor Department may say jobless claims fell for the fourth time in five weeks. New applications for unemployment benefits probably declined by 2,000 last week to 310,000, according to the median of economists' forecasts. The report is scheduled for release at 8:30 a.m. in Washington.

Another Labor Department report may show worker productivity increased at a 1.5 percent annual rate in the fourth quarter, up from the government's initial estimate of 0.8 percent, according to the median of forecasts.

Economic Growth

Gross domestic product increased 4.4 percent last year, the most since 1999. The Commerce Department last week reported the economy grew 3.8 percent in the fourth quarter of 2004, faster than the 3.1 percent growth initially reported.

Forecasts, including a Bloomberg survey, call for growth of about 3.5 percent to 3.6 percent this year, a rate economists such as Michael Moskow, president of the Federal Reserve Bank of Chicago, say can be sustained without fueling inflation.

Retailers may be one of the industries to push up the index. Through all but the last two days of February, purchases at chain stores were up 2 percent from the previous month, according to a report March 1 by Johnson Redbook. Same-store sales rose 7.6 percent in the last week of February from the same week a year earlier, the report showed.

`Strong Turnover'

``Department stores saw strong turnover in spring apparel and other seasonal goods,'' said Catlin Levis, an analyst at Redbook Research. ``Business was helped by sales and other promotional events built around Valentine's Day and President's Day, as well as spring apparel launches.''

Construction spending, another pillar of the expansion, rose 0.7 percent in January to a record $1.047 trillion at an annual rate, as residential, commercial and public building increased, a government report March 1 also showed.

Construction spending has now increased for 12 straight months, the longest period of continuous expansion since record keeping began in 1993.

``I don't see any signs of it abating,'' said DuPont Co.'s chief executive, Charles Holliday Jr., in an interview Feb. 24. ``We have a number of products to really help builders compete.''

U.S. corporate leaders plan to invest more in new plants and equipment as confidence in the economy rises to the highest level in at least two years, a survey of chief executives found.

The Business Roundtable's outlook index for the next six months jumped to 104.4 this quarter, the highest since the survey began in November 2002, from 98.9 in December 2004, according to a poll of 118 of the Washington-based lobbying group's members, issued March 1.

In a separate ISM report released March 1, manufacturers said their business expanded at a slower pace in February. The group's factory index fell to 55.3, the lowest since September 2003, from 56.4 in January. Still, the index has generated readings higher than 50, which indicate growth, since June 2003.

                     Bloomberg Survey

FIRM                     Produc-  Unit Lbr Jobless    ISM
                         tivity   Costs    Claims  Non-man.
-----------------------------------------------------------
Number of replies           55       46       38       55
MEDIAN                     1.5%     1.8%     310      60.0
AVERAGE                    1.5%     1.8%     312      59.9
High Forecast              2.2%     2.8%     325      62.0
Low Forecast               0.9%     1.3%     300      57.0
Previous                   0.8%     2.3%     312      59.2
-----------------------------------------------------------
4CAST Ltd.                 1.7%     1.4%     305      60.3
Action Economics           1.7%     1.4%     310      60.0
AIG Global Invest.         1.6%     n/a      n/a      61.0
Alleti Gestielle           1.0%     n/a      316      57.0
Argus Research Corp.       0.9%     2.4%     n/a      57.0
BNP Paribas                1.2%     1.9%     324      60.0
B of A Capital             1.7%     n/a      305      60.0
B of A Securities          1.5%     1.5%     n/a      60.5
Banco Espirito             n/a      n/a      313      60.0
Bantleon Bank AG           1.3%     1.7%     n/a      59.0
Barclays Capital           1.3%     2.2%     n/a      61.0
Briefing.com               1.4%     n/a      310      60.5
CantorViewpoint            1.6%     1.5%     314      60.3
CIBC World Markets         1.7%     n/a      n/a      n/a
Citigroup                  1.7%     1.4%     325      58.5
Commerzbank                1.7%     1.8%     309      58.0
Credit Agricole            n/a      n/a      n/a      61.0
Credit Suisse FB           1.8%     1.3%     310      60.0
Danske Bank                n/a      n/a      n/a      59.5
DekaBank                   1.5%     1.8%     n/a      58.5
Desjardins Group           1.8%     1.8%     322      59.0
Deutsche Bank Research     2.2%     1.8%     310      60.0
Deutsche PostBank          n/a      n/a      n/a      60.5
Dresdner Kleinwort         1.5%     n/a      n/a      59.0
FTN Financial              1.8%     1.5%     310      60.0
Fortis Bank NV             1.3%     n/a      n/a      60.0
Griffin, Kubik, Stephens   1.4%     2.2%     n/a      60.5
HBOS Treasury              n/a      2.0%     305      59.5
HSBC Markets               1.2%     2.0%     320      61.0
HypoVereinsbank            1.2%     2.2%     320      62.0
I.D.E.A.                   1.5%     1.9%     305      60.5
ING Financial Markets      1.7%     2.2%     n/a      60.5
Informa Global Markets     1.8%     1.4%     309      60.0
Insight Economics          1.5%     1.6%     315      61.0
IntesaBci                  1.1%     2.1%     n/a      60.0
IXIS-CIB                   1.3%     1.8%     n/a      60.0
J.P. Morgan                1.7%     1.4%     310      60.0
JPMorgan Fleming           1.2%     1.9%     310      n/a
Lehman Brothers            1.7%     1.5%     310      58.5
Macroeconomic              1.4%     2.0%     315      n/a
Merrill Lynch              1.5%     1.5%     n/a      60.5
Mizuho Securities          1.3%     2.2%     300      60.5
Morgan Keegan              n/a      n/a      320      n/a
Morgan Stanley             1.5%     1.6%     n/a      n/a
National Bank Financial    1.5%     2.0%     n/a      60.2
National City Bank         1.1%     2.0%     n/a      60.4
Nesbitt Burns BMO          1.4%     2.0%     312      60.0
Nomura                     1.5%     1.6%     n/a      59.5
Nord/LB                    1.7%     2.0%     315      59.2
PNC Bank                   1.6%     1.9%     n/a      n/a
RBS Greenwich Capital      1.8%     1.5%     310      n/a
Ried, Thunberg & Co.       1.1%     2.0%     305      60.0
Scotiabank Group           1.4%     1.7%     310      60.0
Societe Generale           1.4%     2.8%     310      60.0
Stone & McCarthy           1.5%     1.7%     300      n/a
ThinkEquity Partners       1.4%     n/a      315      59.0
Thomson/IFR                1.4%     2.0%     300      60.0
UBS Securities LLC         1.2%     1.3%     315      59.0
Ulpia                      n/a      n/a      321      62.0
Unicredit Banca Mobilare   1.3%     n/a      n/a      58.9
Wells Fargo                n/a      n/a      n/a      60.0
Westpac Banking            1.3%     n/a      n/a      60.5
Wrightson                  1.1%     2.0%     315      60.0

To contact the reporter on this story: Robert Willis in Washington bwillis@bloomberg.net.

Last Updated: March 3, 2005 02:29 EST