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US nonmanufacturing expansion slows in February; private sector growth lowered

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US nonmanufacturing expansion slows in February; private sector growth lowered

U.S. nonmanufacturing sector activity grew at a slightly slower rate in February compared to the previous month amid weakened employment, latest data from the Institute for Supply Management, or ISM, showed.

The ISM nonmanufacturing index fell to a reading of 59.5% last month from 59.9% in January, with 16 industries reporting growth.

ISM said the lower nonmanufacturing index reading may have been caused by the change in the employment index, which dropped 6.6 percentage points to 55% from 61.6%.

The nonmanufacturing business activity index rose to 62.8% from 59.8% in January, and the new orders index increased to 64.8% from 62.7%. The prices index fell to 61% from 61.9%.

In a separate data release, the final IHS Markit U.S. services business activity index for February was unchanged from the initial reading of 55.9, up from 53.3 in January.

IHS Markit said the sharp increase in business activity among service providers drove private sector growth in February, offsetting slightly lower output expansion by manufacturers.

The final seasonally adjusted IHS Markit U.S. composite output index reading for February was lowered to 55.8 from 55.9. It was still the strongest growth rate since November 2015.

"With growth of new orders across the two sectors collectively growing at the fastest rate for three years, March could also prove to be a good month for business activity, rounding off a solid opening quarter or the year," said IHS Markit chief business economist Chris Williamson.