US Sector PMI: Three sectors post lower output in February
US Sector PMI data from Markit provided further evidence of weakening US economic performance in February.
Markit's manufacturing and services PMIs collectively showed the economy grinding to a halt in February, as signalled by a composite Output Index reading of 50.0. This was its lowest level since the financial crisis with the sole exception of October 2013, when the government shutdown disrupted business.
The more detailed sector data revealed how three out of the seven monitored sectors - healthcare, technology and industrials - slipped into decline in February, the most since the series began in October 2009. In January, only one sector - consumer services - had been in decline, and that in part reflected adverse weather.
While the remaining sectors noted growth of activity, the respective rates of expansion were modest at best.
A survey-record decline in output meant that healthcare was bottom-ranked in February. Underlying data showed that the downturn was driven by a first reduction in new orders since the series began almost six-and-a-half years ago.
The next two worst-performing sectors were technology and industrials, where output fell for the first time in 28 and 41 months respectively.
US Sector PMI
US Financials vs Composite PMI
Growth of new business was relatively subdued in both cases. Despite slower growth of output, companies based in healthcare, technology and industrials continued to raise employment, pointing to lower productivity.
Meanwhile, consumer goods and financials had been the two best-performing groups in January, but marked slowdowns in output growth saw them slip to third and fourth place respectively. In particular, financial services activity rose at the weakest pace in over three years amid a near-stagnation in new work.
Data were slightly brighter for consumer services and basic materials. The modest rise in consumer services activity was enough for the sector to climb to the top of the rankings, though this was in part likely to have reflected a temporary rebound after severe weather disrupted the leisure sector in many states in late January.
Basic materials output rose at the fastest pace in three months, and, with input costs falling more slowly than at the start of the year, the degree of uncertainty appeared to have eased.
Philip Leake | Economist, Markit
Tel: +44 149 146 1014
philip.leake@markit.com