Preliminary data released by IHS Markit on Tuesday revealed that U.S.
private sector business activity expanded in early February at a faster pace than in January, as output growth of both
manufacturing and services sectors increased on the back of a significant rebound
in demand from the coronavirus-related disruptions at the start of the year.
According to the report, Markit flash services purchasing manager's
index (PMI) climbed to 56.7 in early February from 51.2 in the previous month. Economists
had expected the reading to rise to 53.0. A reading above 50 signals an
expansion in activity, while a reading below this level signals a contraction. As
demand conditions improved, service providers saw the strongest expansion in
sales since last July, and the pace of employment growth in the sector was the
fastest in nine months. On the price front, both input costs and output prices
demonstrated steeper gains.
At the same time, the Markit flash manufacturing purchasing manager's
index (PMI) came in at 57.5 early this month, increasing from 55.5 in January. Economists had expected the reading to move up to 56.0. The February improvement
in business conditions in manufacturing sector was due to stronger advances in
output and new orders. In addition, manufacturing employment resumed after a
blip in January. On the price front, the pace of input cost inflation among
manufacturers cooled to a nine-month low, while the rate of output price inflation
was the sharpest in three months.
Overall, IHS Markit Flash U.S. Composite PMI
Output Index came in at 56.0 in February, sharply up from 51.1 in January,
which was the lowest reading in 18-months.