06-Mar-2025 08:48

US service sector activity continued to expand during February, but at a reduced pace as new business growth slowed again. Weaker demand growth subsequently weighed on service sector expectations and, amid some worries and uncertainty over federal government policies related to trade and budgets, confidence in the outlook fell in February.

At the same time, job cuts were recorded for the first time in three months.

Cost inflation also picked up in February as suppliers raised prices, although competitive pressures meant that service providers increased their own charges only modestly.

The seasonally adjusted S&P Global US Services PMI Business Activity Index recorded 51.0 in February. Although above the critical 50.0 no-change to signal further growth of the sector, the rate of expansion was modest and the slowest since November 2023.

Growth has softened noticeably in 2025 so far compared to the robust rates seen during the second half of last year.

The S&P Global US Composite PMI Output Index fell to 51.6 in February, down from 52.7 in January.

It was the second successive month in which the PMI has fallen, and the latest reading was the lowest since last April. Divergent trends were, however, seen at the broad sector level.

Manufacturing output rose markedly, but service sector growth softened to a 15-month low. Similar trends were seen for new business, whilst there was a service sector led decline in composite employment for the first time in three months.

Price data showed cost inflation hitting its highest level in five months, but output charges rose to a lesser degree.

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