(Recasts with services data, adds background)
MEXICO CITY, April 25 (Reuters) - Mexico's economy expanded in February at the fastest pace in seven months as a rebound in the service sector pointed to stronger growth ahead after a weak start to the year.
Mexico's economy grew 0.54 percent in February from January at a seasonally adjusted pace, up from an upwardly revised 0.24 percent expansion in January, the national statistics agency said on Friday.
The service sector expanded 0.51 percent in February compared to the prior month, bouncing back after dropping in December and posting flat growth in January. Industry grew 0.28 percent in February, month-on-month.
Economic growth sank to a four-year low of 1.1 percent last year on weak factory output and a slump in construction. A slow start to 2014 drove analysts to cut their forecasts for this year to 3 percent versus a government outlook of 3.9 percent.
Mexico's central bank is expected to announce on Friday that it was holding its main interest rate steady as easing inflation pressures give policymakers room to leave borrowing costs low to support the economic recovery.
The Mexican economy expanded 1.74 percent compared with February of 2013, the institute said, below the upwardly revised 0.96 percent expansion seen in January. (Reporting by Michael O'Boyle Editing by W Simon)