US composite PMI at 17-month low as services sector contracts
By Benjamin Chiou
Date: Friday 21 Feb 2025
(Sharecast News) - Economic growth in the US private sector slowed to its lowest level in 17 months in February, as a pick-up in manufacturing output was offset by a renewed contraction in the services industry.
The S&P Global US composite purchasing managers' index (PMI) sank to just 50.4 this month, according to 'flash' estimates out on Friday, down from 52.7 in January.
Holding just above the neutral 50-point mark which separates contraction and growth, the reading marks the weakest rate of growth since September 2023.
Behind the significant monthly change was the American services industry which saw its first drop in activity in more than two years. The services PMI fell to 49.7 from 52.9, coming in well below the consensus forecast of 53.0.
According to S&P Global, the growth in new orders weakened sharply and business optimism for the next 12 months slumped amid growing uncertainty about federal government policies.
However, the manufacturing PMI rose to 51.6 from 51.2, beating the 51.5 estimate. This was the highest rate of growth in manufacturing in eight months, which purchasing managers partly put down to the front-running of tariffs.
Input cost pressures spiked, with manufacturing suppliers already passing on tariff-related price hikes, while wage pressures persisted.
"The upbeat mood seen among US businesses at the start of the year has evaporated, replaced with a darkening picture of heightened uncertainty, stalling business activity and rising prices," said Chris Williamson, chief business economist at S&P Global Market Intelligence.
"Companies report widespread concerns about the impact of federal government policies, ranging from spending cuts to tariffs and geopolitical developments. Sales are reportedly being hit by the uncertainty caused by the changing political landscape, and prices are rising amid tariff-related price hikes from suppliers," he said.
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