US private sector growth slows in February

Markit’s flash US composite output index – which measures activity in the services and manufacturing sectors – fell to 54.3 in February from 55.8 the previous month.

Still, this was above the 50 mark that separates contraction from expansion for the twelfth consecutive month.

Meanwhile, the index for services business activity declined to a two-month low of 53.9 from 55.6 in January, undershooting consensus estimates for a reading of 55.8.

The manufacturing index printed at 54.3 from 55.0 the month before, missing expectations for a reading of 55.3.

Markit said the slowdown in service sector growth from January’s 14-month peak largely reflected a moderation in new business expansion to its weakest for five months.

Chris Williamson, chief business economist at IHS Markit, said: “The drop in the flash PMI numbers for February suggests that the post-election upturn has lost some momentum. Growth of business output, new orders and hiring all waned, as did inflationary pressures.

“February also saw a sharp pull-back in business optimism about the outlook over the next 12 months, which suggests companies have become more cautious about spending, investing and hiring. However, even with the February dip, the PMI remains at a level broadly consistent with the economy growing at a 2.5% annualized rate in the first quarter. The survey’s employment index is meanwhile indicating that a respectable 165,000 jobs were added to the economy in February.”