Preliminary
data issued by S&P Global on Friday revealed that U.S. private sector business
activity demonstrated only slight expansion in early February as a renewed contraction
in business activity in the services sector offset faster growth in manufacturing activity.
According to
the report, S&P Global flash U.S. Composite Purchasing Manager's Index
(PMI) Output Index came in at 50.4 early this month, down from 52.7 in January.
The latest reading was the lowest in 17 months and signalled a near-stalling of
business activity.
A reading above
50 signals an expansion in activity, while a reading below this level signals a
shrinkage.
S&P Global
flash services PMI checked in at 49.7 in February, down from 52.9 in January. That
indicated the first shrinkage in the services sector activity since January
2023. Economists
had forecast the services PMI to increase to 53.0.
Meanwhile, S&P
Global flash manufacturing PMI rose to 51.6 in February from 51.2 in the
previous month. The latest print pointed to the strongest growth in the goods-producing
sector since last June 2024. Economists had expected the manufacturing PMI to improve to 51.5.
S&P Global
noted that new order growth weakened sharply and business expectations for
the year ahead slumped amid growing concerns and uncertainty related to federal
government policies. In addition, employment decreased slightly amid heightened
uncertainty and concerns over increasing costs. On the price front, selling
price inflation eased to a three-month low in February, while input cost
inflation accelerated to a four-month high, with companies citing tariff-related
price hikes from suppliers alongside rising food prices and upward wage
pressures.