IHS Markit Flash U.S. Composite PMI Output Contracts for First Time Since October 2013

U.S. IHS Markit Flash Manufacturing PMI 50.8, Services 49.4

• composite PMI lowest since 2013
• Flash U.S. Composite Output Index at 49.6 (53.3 in January). 76-month low.
• Flash U.S. Services Business Activity Index at 49.4 (53.4 in January). 76-month low.
• Flash U.S. Manufacturing PMI at 50.8 (51.9 in January). 6-month low.
• Flash U.S. Manufacturing Output Index at 50.6 (52.4 in January). 7-month low

Private sector firms across the U.S. signalled a slight decline in business activity in February. The overall contraction was driven by a notable worsening of service sector performance, where output fell for the first time in four years.

Adjusted for seasonal factors, the IHS Markit Flash U.S. Composite PMI Output Index posted 49.6 in February, down from 53.3 in the opening month of 2020. Although only fractional, the decrease in business activity brought to an end a near-four year sequence of expansion following a contraction in service sector output and a slower rise in manufacturing production amid supplier delays following the outbreak of coronavirus.

The composite index is based on original survey data from IHS Markit’s PMI surveys of both services and manufacturing.

New orders received by private sector firms fell for the first time since data collection began in October 2009. The fractional decline in new business stemmed from weak client demand across the service sector and the slowest rise in manufacturing new order volumes for nine months. Private sector companies continued to struggle to attract foreign client demand as new export orders fell for the second month running.

Employment continued to increase midway through the first quarter, albeit at the slowest pace in the current four-month sequence of growth. Manufacturers and service providers alike registered a rise in workforce numbers, although the pace of job creation eased in both monitored sectors.

Inflationary pressures softened in February. The rate of increase in cost burdens eased to the slowest since last October amid reports of lower demand for inputs. As a result, private sector companies raised their output charges at the softest pace for three months.

Business confidence strengthened to an eightmonth high in February but remained historically subdued as firms highlighted ongoing global uncertainty and the outbreak of coronavirus.