The only important economic data released this morning was the latest update to the composite purchasing managers' index (PMI) from IHS Markit. Specifically, the headline manufacturing index slid to 54.3 during the first half of February, worse than expected but still just fractionally below the 22-month high hit in January. Softer output and new order growth weighed the most on the manufacturing index this month, although sales to domestic clients remained relatively strong. Surveyed managers also signaled that input cost inflation this month was at its highest level since 2014, which along with the modest rise in factory gate prices suggests continued pressure on operating margins.
As for Markit’s services sector PMI, this index also fell in February (53.9) due largely to a moderation in new business expansion and an uptick in service providers reporting a “greater degree of caution in terms of client spending.” However, this index is still relatively high and implies that the U.S. service sector remains on track to register its fastest quarterly growth in roughly two years. Chris Williamson, chief business economist at IHS Markit, added that, “The drop in the flash PMI numbers for February suggest that the post-election upturn has lost some momentum. … However, even with the February dip, the PMI remains at a level broadly consistent with the economy growing at a 2.5% annualized rate in the first quarter. The survey’s employment index is meanwhile indicating that a respectable 165,000 jobs were added to the economy in February.”
Sources: Econoday, IHS MarkitPost author: Charles Couch