Short Note on US Services PMI

In February, ISM Services PMI registered 55.1% (marginally lower than prior reading of 55.2%), showing a growth in February for the second consecutive month after a reading of 49.2 % in December, the first contraction since May 2020 (45.4 %).

For a quick understanding of how the components have moved, look below. The market is most concerned about inflation and while the prices paid index continues to be elevated , it is gradually moving towards equilibrium and the supplier delivery time is reducing which is supportive of lower prices.

1. Business Activity Index at 56.3% (prior 60.40%)
2. New Orders Index at 62.6% (prior 60.40%)
3. Employment Index at 54% (prior 50.00%) Employment activity in the services sector grew in February after an unchanged reading in January
4. Supplier Deliveries Index at 47.6% (prior 50.00%) - The number indicated the fastest delivery performance since June 2009, when the index registered 46 %. Note that Supplier Deliveries is the only component that is inversed; a reading of above 50 % indicates slower deliveries, which is typical as the economy improves and customer demand increases
5. Prices Paid increased in February for the 69th consecutive month, with the index registering 65.6 %, 2.2 % points lower than the 67.8 % recorded in January. The Prices Index continues to indicate movement toward equilibrium, with an eighth consecutive reading near or below 70 %, following nine straight months of readings above 80 %. The only industry reporting a decrease in prices for February is Accommodation & Food Services.