US PMI Softens: Manufacturing Falls, Services Follows Retreat
US private sector business activity continued to expand in February, but at a slower pace than in January. Flash data from S&P Global showed the Composite PMI fell slightly to 52.3 from 53.0.
The weakening was evident on two fronts. The Manufacturing PMI fell to 51.2 from 52.4, while the Services PMI fell to 52.3 from 52.7. Both figures were also slightly below analysts' expectations, indicating that economic momentum was not as strong as expected.
S&P Global attributed this slowdown to a combination of factors: weakening demand, persistently high prices, and adverse weather that disrupted activity. As a result, output expansion was the slowest in 10 months.
According to Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, customer demand growth is beginning to soften. In fact, factory orders were reported to have fallen, which is usually an early sign of pressure on manufacturing activity.
Consequently, job growth has also slowed. Williamson assessed that weakening orders have caused hiring growth to "creep" in both manufacturing and services, as companies become more cautious about the demand outlook.
Despite the weakening PMI data, the foreign exchange market reaction tended to be limited. The US Dollar Index did not show a significant response and was last seen rising slightly by around 0.12% to 97.95, indicating that market participants may be waiting for other catalysts (such as inflation/employment data) before changing large positions.
Source: Newsmaker.id
