Markit final services PMI 56.5 versus 56.7 preliminary

The Markit final February US services PMI shows:

• Services PMI index final 56.5 versus 56.7 flash. The January services PMI came in at 51.2
• Composite 55.9 vs 56.0 preliminary. The January index game in a 51.1.
• The faster rise in output was supported by the steepest upturn in new sales for seven months. Total new orders were also aided by a solid increase in foreign client demand.
• The steep expansion in service sector business activity was reportedly indicative of stronger demand conditions and a quicker rise in new orders as the Omicron wave of COVID-19 slowed
• the index represents a seven-month high
• Output charges rise at fastest pace on record
• Rate of job creation quickest since May 2021

The IHS chief business economist Chirs Williamson said:

• “US service sector companies reported a strong rebound in business activity during February as virus containment measures were eased to the loosest since November. The data add to evidence from manufacturing surveys that the Omicron wave appears to have had only a modest and short-lived impact on the economy.
• “February’s PMI surveys are broadly consistent with GDP rising at an annualised rate of 3.5%, representing a substantial improvement on the 0.9% rate signalled by the January surveys. First quarter GDP growth is therefore currently averaging just over 2%.
• “Supply chain bottlenecks and poor labor availability remain widespread constraints on output , however, limiting economic growth in manufacturing and services, meaning demand continues to rise faster than output, resulting in unprecedented price pressures.
• “The Ukraine conflict is leading to further upward movements in energy and broader commodity prices, which will add further to US inflationary pressures. More uncertain will be the extent to which business confidence is being affected by the war. Business optimism about the year ahead had surged across manufacturing and services in February to the highest for 15 months, as firms looked ahead to looser COVID-19 restrictions and saw signs of easing supply constraints. However, the resilience of this optimism will be tested by the conflict in Europe and will need to be monitored in the coming weeks as a barometer of risk appetite in terms of both spending and investment.”

Below is the trend in the composite PMI output index

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