With both manufacturing sector surveys still in contraction (and signaling a staglfationary drop in production while prices paid rebound), expectations were for both Services sector surveys to signal growth in February.
The final print from S&P Global’s US Services PMI was 50.6, up from the flash print of 50.5, and a big rebound from the 46.8 print in January.
After a big rebound in January (from the sudden plunge in December), ISM’s Services PMI dipped very modestly from 55.2 to 55.1 (better than the expected 54.5).
This is a return to expansion (albeit barely) for S&P Global’s survey after seven months of contraction.
While S&P Global’s survey reports an increase in prices paid for services and manufacturing (and ISM’s manufacturing survey also showed an increase in prices paid), the ISM Services signal was a continued drop in the prices paid, while new orders and employment picked up…
Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, said:
“A return to growth of US service sector business activity in February for the first time in eight months has offset a decline in manufacturing output, helping stabilize the economy and hopefully avert a downturn in the first quarter.
“The upturn was led by a revival in spending on services by consumers and improved activity in the tech sector, but was also aided by a marked cooling in the recent downturn in financial services.
“Across both services and manufacturing, jobs growth has risen to a five-month high as business confidence about the year ahead has perked up to its highest since last May, reviving further from the low-point seen last October. Clearly the gloom heading into the winter has been replaced with brighter prospects moving into the spring.
“This improving picture has, however, added to firms’ pricing power. Having fallen to a 27-month low in January, the rate of inflation for goods and services reaccelerated in February to its highest since last October as companies reported greater success in passing higher costs on to customers.”
Finally, the S&P Global US Composite PMI Output Index posted 50.1 in February, up from 46.8 in January.
The latest data signalled an end to a seven-month sequence of contraction and indicated broadly stable levels of business activity at private sector firms.