The S&P Global Composite PMI for February came in at 51.6, surpassing the consensus estimate of 50.4, and marking an improvement from January’s reading of 50.4, indicating modest growth in overall business activity. A reading above 50 suggests expansion, while below 50 would indicate contraction. The positive surprise was largely driven by the services sector, where the February S&P Global Services PMI hit 51, beating expectations of 49.7.
The momentum was echoed in the Institute for Supply Management (ISM) Services PMI, which rose to 53.5 in February, ahead of forecasts calling for a more modest 52.7. The ISM Services PMI has consistently reflected the economic strength of the service-oriented US economy, which continues to be a pillar of the broader recovery.
Breaking down the ISM Services data further, several subcomponents also exceeded expectations, underlining the ongoing dynamism in the sector. ISM’s Services Business Activity index reached 54.4, just slightly above expectations of 54.2, and reflecting continued growth in the pace of business activity. The employment subcomponent was also robust, coming in at 53.9, far above the forecast of 52.1, signalling that hiring in the services sector is expanding at a stronger rate than anticipated.
One of the most notable areas in the ISM Services data was the New Orders index, which printed at 52.2, surpassing the expected 51.2. This shows that demand for services is picking up, pointing to sustained optimism among businesses and consumers about the economy’s direction.
However, inflationary pressures remain a concern. The ISM Services Prices index jumped to 62.6 in February, well above the expected 60.6, signalling continued upward pressure on costs in the service sector. While this suggests that inflationary challenges are still present, the overall trend in services activity points to an economy that remains resilient in the face of these pressures.
(Edited by : Ajay Vaishnav)
