The flash manufacturing PMI rose to 51.6 in February, topping the 51.3 consensus and January's 51.2. This signals faster expansion in business conditions within the goods-producing sector and an 8-month high.

The services PMI fell to 49.7, below the 53.0 consensus and January's 52.9. This is a drastic 25-month low for the US service PMI and indicates slight contraction.

The PMI composite registered 50.4, down from January's 52.7. This signals a slow rate of expansion and a 17-month low in business activity.

Inflationary pressures cooled to a 3-month low in February. Meanwhile, cost pressures intensified to its highest since September 2024 with services input cost inflation reaching a 4-month high. Firms cited tariffs as a cause of increased food prices and wage pressure. The manufacturing sector also showed a steep increase in costs of raw materials.

Forecasters see manufacturing rising to 51.3 in February flash from 51.2 with services similarly edging up to 53.0 from 52.9.

The flash Composite Purchasing Managers' Index (PMI) provides an early estimate of current private sector output by combining information obtained from surveys of around 1,000 manufacturing and service sector companies. The flash data are released around 10 days ahead of the final report and are typically based upon around 85 percent of the full survey sample. The report tracks changes in variables such as new orders, stock levels, employment and prices across both manufacturing and services. Production is also tracked, defined as"production" for manufacturing and"output" for services. Results are synthesized into a single index which can range between zero and 100. A reading above (below) 50 signals rising (falling) output versus the previous month and the closer to 100 (zero) the faster output is growing (contracting). The report also contains flash estimates of the manufacturing and services PMIs. The data are produced by S&P Global.

Investors need to keep their fingers on the pulse of the economy because it dictates how various types of investments will perform. By tracking economic data such as the purchasing managers' manufacturing indexes, investors will know what the economic backdrop is for the various markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly and causing potential inflationary pressures.