US composite PMI eases as service-sector growth slows

Private-sector activity growth in the US eased slightly in February, according to figures released on Thursday by S&P Global, as a slight slowdown in the services sector outweighed an acceleration in manufacturing.

The S&P Global composite purchasing managers' index (PMI) declined to 51.4 this month, down from 52.0 in January. However, this was still the second-fastest rate of growth – indicated by any figure over 50 – since July 2023.

The services PMI fell to 51.3 from 52.5, missing the 52.0 expected by economists, but remained in growth territory for the 13th straight month.

Meanwhile the manufacturing PMI unexpectedly increased to a 17-month high of 51.5 from 50.7, ahead of the 50.5 consensus forecast, as firms reported a renewed increase in production amid an improvement in supply chains after adverse weather in January. Output at factories increased for the first time in three months and at its fastest pace since April 2023.

“Better weather conditions compared to January trumped shipping concerns, helping drive an overall improvement in supplier delivery times, which in turn facilitated higher factory production," said Chris Williamson, the chief business economist at S&P Global Market Intelligence.

"Signs of inventory reduction policies becoming less widespread also helped boost production and sustain high levels of business confidence in the outlook for the year ahead among manufacturers."

On the hiring front, S&P Global said that job creation was "broad based" in February, with both manufacturers and services providers reporting a rise in staff numbers, though the pace of growth slowed to its lowest level in three months with services firms highlighting caution about costs and softer new order growth.

"Demand conditions improved further, but at a softer rate as a less marked increase in service sector new business offset an improvement in manufacturing. The slower rise in new sales led firms to recruit additional workers at a slightly reduced rate and also dampened confidence in the outlook for output over the next year," S&P Global said in a release.