The low reading on employment could augur weak job gains in Friday's government report on February payrolls. Services make up about 80% of the economy.
The overall index of activity in services industries fell to 51.6 from 54 in January, the Institute for Supply Management said. Economists expected a smaller dip to 53.5. A reading over 50 indicates the sector is expanding; below 50 means it's contracting.
EMPLOYMENT: Winter chills February job gains, says ADP
The employment index declined to 47.5 from 56.4. As a result, RDQ Economics said it's lowering its estimate of payroll increases in the government report to 120,000 from 125,000. Economists overall were expecting 150,000 gains in the government survey, according to a consensus forecast.
Frigid temperatures and snowstorms have held down industrial production, retail sales and housing activity the past two months.
One positive sign is that a measure of orders rose slightly, possibly heralding an increase in service-sector activity in coming months.
INTERACTIVE: Where the jobs are
In a separate report, payroll processor ADP said Wednesday businesses added 139,000 jobs in February. Economists had expected ADP to report 158,000 additional private-sector jobs, according to a consensus forecast.
"February was another soft month for the job market," said Mark Zandi, chief economist of Moody's Analytics, which helps ADP compile the report. "Bad winter weather, especially in mid-month, weighed on payrolls. Job growth is expected to improve with warmer temperatures."
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