US Services Activity Growth Edges Higher: S&P Global

The S&P Global US Services PMI fell to 51.7 in February of 2026 from 52.7 in the previous month, revised lower from the preliminary estimate of 52.3 and well below the initial market estimates of 53 to reflect the softest pace of expansion in the US services sector in ten months. New work flows expanded at a softer pace, limited by a drop in export orders as foreign clients continued to struggle with uncertain trade policies from the retaliation on US tariffs. Still, firms registered a robust growth rate in their employment levels, largely due to ease in in filling existing vacancies, while cost-cutting efforts prevented a larger expansion in the workforce. Labor expenses had resulted in higher input inflation for service providers, driving an acceleration in output charges. Despite the softening signs, companies increased their optimism on future business due to tax breaks and stronger economic sentiment.

The S&P Global US Services PMI fell to 52.3 in February of 2026 from 52.7 in the previous month, missing expectations that it would increase to 53 to reflect the softest expansion in the US services activity in 10 months, according to a flash estimate. New work flows in the sector was sustained at a softer pace, pressured by a drop in export orders. The sluggish momentum in client demand drove firms to slow their marginal hiring rate. In the meantime, selling charges for services providers rose to a seven-month high to match their highest level in over three years, with input cost inflation remaining elevated but below recent peaks. Looking forward, companies remained optimistic that the end of a harsh winter and lower interest rates and tax breaks would support business activity in the upcoming year.

The S&P Global US Services PMI rose to 52.7 in January of 2026 from 52.5 in the previous month, revised upwards from the flash estimate of 52.5 and loosely aligned with the initial market expectations of 52.8. The period marked nearly three years of monthly growth in the US services output, outperforming those from other major economies. New sales rose at a sharper pace at the start of the year, as robust activity in the domestic market was enough to offset softness for foreign clients amid the tariffs passed by the US and their retaliatory measures. The steady capacity demand drove employment numbers to increase marginally. Meanwhile, increases in payrolls and cost pressures from tariffs lifted input inflation, although selling charges increased to a lesser extent. Looking forward, business confidence for the upcoming year fell to its lowest in three months.