US Feb. services PMI 51.7; prelim 52.3

US Feb. services PMI 51.7; prelim 52.3

U.S. Services Sector Growth Slows in February, S&P Global Reports

The U.S. services sector expanded at its weakest pace in 10 months in February 2026, with the S&P Global flash Services PMI slipping to 52.3 from 52.7 in January. This marks the lowest growth rate since April 2025 and fell short of market expectations of 53.0. The manufacturing sector also weakened, with its PMI dropping to 51.2—a seven-month low—from 52.4 in January. Both sectors signaled a moderation in economic momentum as new orders declined and employment growth stalled.

The Composite PMI Output Index, which combines manufacturing and services activity, fell to 52.3 in February, down from 53.0 in January. This suggests annualized GDP growth of approximately 1.5% for the first quarter, a sharp slowdown compared to the robust expansion seen in late 2025. S&P Global economist Chris Williamson attributed the softening to declining business orders, stagnant hiring, and persistent cost pressures.

Services firms reported weaker demand, particularly for export orders, while input cost inflation remained elevated, though below recent peaks. Employment in both sectors contracted to a near-stall level, with a PMI reading of 50.2. Meanwhile, services providers raised selling prices to a seven-month high, reflecting ongoing inflationary pressures.

Looking ahead, businesses expressed cautious optimism that milder winter weather and potential interest rate cuts could stimulate activity in the coming months. However, the data underscore growing concerns about the resilience of U.S. economic growth amid shifting consumer spending and global demand.

Investors are likely to monitor upcoming employment and inflation reports for further clues on the Federal Reserve's policy trajectory, as well as the broader economic outlook.

Reuters, February 20, 2026: Reuters, February 20, 2026
Trading Economics, February 20, 2026: Trading Economics, February 20, 2026