US services sector swings back into expansion in February, S&P Global says

Output from America's private sector swung back into expansion unexpectedly in February after a seven-month stretch of declines, the results of two surveys revealed.

S&P Global's Composite Output Index jumped from a reading of 46.8 in January to 50.2 for February.

Services led the way with the Purchasing Managers' Index for the sector increasing from 46.8 to 50.5 (consensus: 46.9).

The PMI for manufacturing meanwhile improved from 46.9 to 47.8 (consensus: 47.0).

According to Chris Williamson, chief business economist at S&P Global Market Intelligence, the business mood had brightened amid signs that inflation had peaked and recession risks had "faded".

Williamson also noted how supply constraints had abated, such that delivery times for factory inputs were improving at a rate last seen in 2009.

However, the improvement in services was partially the result of "unseasonably warm weather", while factories remained focused on inventory reduction.

Furthermore, price pressures had now shifted from manufacturing supply chains to wages amid a tight labour market.

"By potentially stoking concerns over a wage price spiral, accelerating service sector price growth will add to calls for higher interest rates, which could in turn subdue the nascent expansion."