U.S. Services Sector Growth Reaches a More Than Six-Year High in February -- IHS Markit
By Xavier Fontdegloria
Activity in the U.S. services sector grew in February at the
fastest rate in more than six years supported by a marked rise in
new orders following stronger client demand, data from IHS Markit
The final reading for the U.S. Services Purchasing Managers'
Index for February was 59.8, up from 58.3 in January and above the
flash estimate of 58.9. Economists polled by The Wall Street
Journal expected the final services PMI to come in at 58.9.
The indicator marks the seventh consecutive monthly expansion
for the service sector. The pace of growth is the fastest since
July 2014, IHS Markit said.
The U.S. Services PMI is a survey-based measure of activity in
industries such as communications, finances or consumer services. A
level above 50 indicates expansion, while a reading below 50
Although consumer-facing sectors, notably hospitality, travel
and tourism, continue to be adversely affected by Covid-19
restrictions, other parts of the economy such as financial and
business services are springing back into life, said Chris
Williamson, chief business economist at IHS Markit.
"Even some hard hit consumer-facing sectors are enjoying some
loosening of restrictions or adapting to life with the virus," he
The upturn of activity in February was reportedly linked to
stronger client demand and a further rise in new business due to
stronger client demand and greater customer confidence following
the start of the vaccine rollout, the report said.
However, input costs rose further in February amid increases in
supplier charges and wage bills. The rate of cost inflation
quickened to the fastest since data collection began in October
2009, IHS Markit said.
In response, service sector firms sought to pass on higher cost
burdens to clients, the report said.
"Some of these higher costs will inevitably prove transitory as
pandemic-related disruptions to supply start to ease, but it
remains unclear how long these price pressures will persist for due
to uncertainties over the duration of social distancing
requirements and the strength of demand over the coming months,"
Mr. Williamson said.
IHS Markit said the Composite PMI Index was 59.5 in February, up
from 58.7 in January.
Write to Xavier Fontdegloria at firstname.lastname@example.org
(END) Dow Jones Newswires
March 03, 2021 10:18 ET (15:18 GMT)
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