| Consensus | Consensus Range | Actual | Previous | |
| Composite Index | 51.9 | 53.0 | ||
| Services Index | 52.3 | 52.0 to 52.3 | 51.7 | 52.7 |
Highlights
The S&P Global US Composite Purchasing Managers' Index final reading came in at 51.9 in February compared to 53.0 in January, and 52.7 in December, sign of a cooling economic growth rate that was compounded by severe winter weather. Meanwhile employment only rose slightly given the tepid confidence in the outlook.
There was a broad-based weakening in both manufacturing and service sector output, along with a concurrent moderation in new business activity halfway through Q1.
The US Services PMI Business Activity Index recorded 51.7 in February, compared to 52.7 in January, and 52.5 in December, below expectations of 52.3 in the Econoday survey of forecasters.
The Manufacturing PMI's final reading came in at 52.4, compared to 52.4 in January and expectations for 51.2 in the Econoday survey of forecasters.
Employment growth was mainly due to filling existing vacancies, and the increase was only fractional amid reports that cost-cutting efforts had constrained hiring activity.
On the inflation front, overall input costs spiked again in February, together with a jump in selling price inflation reflecting elevated cost pressures from tariffs and rising employee expenses.
In a more hopeful sign, service providers remained positive about future activity levels, with the degree of optimism improving compared to January, the report said. However, the level of positive sentiment was below its long-run average as uncertainty regarding the direction of government policies weighed on sentiment.
Market Consensus Before Announcement
No revision expected in the final February report from the flash for PMI services at 52.3.
Definition
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.
Description
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.