U.S. service sector output records strong and accelerated growth in February

The U.S. service sector output saw a robust and accelerated growth in February. The seasonally adjusted flash IHS services PMI index rose to 55.9 from 53.3, hinting at the steepest pace of growth for six months. Furthermore, the latest reading was one of the highest achieved since the start of 2015.

A continued recovery in new order volumes aided in underpinning business activity growth in February. The latest upturn in new work received by service sector firms was the steepest since March 2015. Anecdotal evidence implied that resilient business and consumer sentiment had aided in boosting sales volumes in the latest survey period. Service providers sough to expand operating capacity by taking on additional staff in February.

The pace of job creation was the most rapid since August 2017, but this did not avert a further rise in backlogs of work throughout the service sector. Furthermore, stronger demand helped in underpinning a rebound in business expectations for the next 12 months. The data for February indicated that service sector business sentiment reached its highest since May 2015.

Meanwhile, input costs surged in February, with the latest rise the strongest for around four-and-a-half years. Average prices charged by service sector companies rose at the most rapid pace since September 2014.

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