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The February U.S. Services Purchasing Managers’ Index (PMI) from S&P Global fell 1.0 point to 51.7, indicating modest growth in the services sector last month. This marks 37 straight months of continuous service sector expansion but signaled the weakest growth since April of last year. The latest reading was lower than the forecast of 52.3.
From the latest press release, Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, said:
“February’s PMI surveys reflect increasingly tough trading conditions for businesses so far this year. Slowing demand growth from customers both at home and across export markets has been compounded by adverse weather in many states, resulting in the smallest rise in service sector activity for ten months.
“Combined with a sharp slowing of manufacturing output growth in February, waning service sector performance indicates that the economy is growing at an annualized rate just below 1.5% so far in the first quarter, though hopefully this will improve somewhat if we see a weather-related bounce back in March.
“However, optimism about the year ahead remains subdued by concerns over government policies, and is especially low in the service sector, where the tariff impact is seen as broadly negative and where labor-intensive industries such as leisure and recreation continue to suffer from a combination of worker shortages, high costs and low consumer confidence.”
Background on the S&P Global US Services PMI
The S&P Global US Services PMI™ measures the activity level of purchasing mangers in the services sector through a questionnaire of ~400 service sector companies. The sectors covered include consumer (excluding retail), transportation, information, communication, finance, insurance, real estate, and business services. The S&P Services PMI is a diffusion index, meaning that a reading above 50 indicates expansion in the sector compared to the previous month and a reading below 50 indicates contraction.
Here is a snapshot of the series since mid-2012.
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