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US private sector posts strongest expansion in more than 2 years

Business activity growth among U.S. private sector firms hit its strongest pace in more than two years in February, as both manufacturing and services improved, the latest data from IHS Markit showed.

The seasonally adjusted IHS Markit flash U.S. composite output index rose to its highest reading since November 2015, increasing to 55.9 this month from 53.8 in January.

The flash manufacturing purchasing managers' index rose 55.9 from 55.5 last month, while the flash services business activity index climbed to 55.9 from 53.3.

IHS Markit said both the manufacturing and services sectors saw stronger new business growth in February, recording the biggest influx of new orders in nearly three years.

Business confidence for the next 12 months also jumped to its highest since May 2015, with several firms citing greater sales volumes at their business units and anticipation of sustained improvement in U.S. economic conditions.

"Such optimism encouraged firms to step up their hiring, with payroll growth reaching a two-and-a-half-year high, underscoring the broad-based bullish mood across the business sector," said IHS Markit chief business economist Chris Williamson.

Williamson said the latest IHS Markit survey data showed that the U.S. economy was growing at an annualized rate of 3.0%.