The S&P Global US Composite Purchasing Managers' Index came in at 51.6 in February, down from 52.7 in January, and compared to expectations for 50.4 in the Econoday survey of forecasters.

The US Services PMI Business Activity Index recorded 51.0 in February, down from 52.9 in January, but above expectations of 49.7.

New business growth slowed again, the report notes, as [w]eaker demand growth subsequently weighed on service sector expectations and, amid some worries and uncertainty over federal government policies related to trade and budgets, confidence in the outlook fell in February.

At the same time, job cuts were recorded for the first time in three months, it added.

Cost inflation also picked up in February as suppliers raised prices, although competitive pressures meant the increases were only modest.

The weaker trend in new business, and broader economic uncertainty, weighed heavily on service sector business confidence, the report said, with a steep deterioration in sentiment to its lowest since September, falling far below its long-run trend in February.

That said, firms still expect on average activity to rise from present levels in 12 months' time.

No revision from the flash is expected for the composite at 50.4 and services at 49.7.

US Services Purchasing Managers' Index (PMI) is based on monthly questionnaire surveys collected from over 400 U.S. companies which provide a leading indication of what is happening in the private sector services economy. It is seasonally adjusted and is calculated from seven components, including New Business, Employment and Business Expectations.

Investors need to keep their fingers on the pulse of the economy because it indicates how various types of investments will perform. The Markit Services PMI provides advance insight into the services sector, which gives investors a better understanding of business conditions and valuable information about the economic backdrop of various markets. The stock market likes to see healthy economic growth which generally 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. The PMI data are also used by many Central Banks to help make interest rate decisions.

The IHS Markit Services Flash data give a detailed look at the services sector, the pace of growth and the direction of this sector. Since the service sector accounts for more than three-quarters of U.S. GDP, this report has a significant influence on the markets. In addition, its sub-indexes provide a picture of new business, employment, business expectations and prices.