Business activity in the US stabilized in February as the service sector reconsolidated, suggesting that the resilience of the economy is holding up some pricing power.
S&P Global’s composite Purchasing Managers’ Index for February rose 3.4 points to 50.2, the group said Tuesday.
The group’s composite measure of employment at manufacturers and service providers rose to a five-month high, indicating continued strong demand for labor. While growth in input costs eased, the price index jumped to a four-month high.
The report also showed that a measure of future production rose to the highest level since May, indicating greater optimism about demand.
“Despite challenges from rising interest rates and cost-of-living pressures, business sentiment has improved amid signs that inflation has peaked and recessionary risks have diminished,” Chris Williamson, chief business economist at S&P Global Market Intelligence, said in a statement.
Meanwhile, Williamson explained: The survey data confirm how the driving force of inflation has now shifted towards wages in a tight labor market.
A gauge released by S&P showed the services index expanding for the first time since June, likely in part due to the month’s unusually warm weather. Meanwhile, the manufacturing index showed a slowdown in the pace of contraction.
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