Service Sector Weakness Drives Composite PMI Down to 51.4

Highlights

• The Manufacturing PMI rose from 50.7 in January to 51.5 in February.
• The Services PMI dropped from 52.5 to 51.3.
• The Composite PMI fell from 52 to 51.4.  

On February 22, 2024, S&P Global published the PMI reports for February, revealing mixed performance in the manufacturing and services sectors. The Manufacturing PMI surpassed analyst expectations, climbing from 50.7 in January to 51.5 in February, driven by an easing pressure on supply chains, leading to a renewed improvement in vendor performance. 

Contrastingly, the Services PMI fell short of projections, declining from 52.5 in January to 51.3 in February, while the Composite PMI decreased from 52 to 51.4 due to the weaker-than-expected performance of the services sector. S&P Global attributed the softer growth to the less marked increase in service sector new business offsetting an improvement in manufacturing.

Following the release of the PMI data, the U.S. Dollar Index retreated towards the 104 level, affected by the weaker-than-expected Services PMI, which may exert pressure on the American currency. Gold prices remained stagnant near the $2025 level, supported by rising demand for safe-haven assets, but awaited additional catalysts to move higher.

Moreover, the SP500 saw new highs post the PMI release, with traders speculating that the Fed may adopt a less hawkish stance given the slowdown in the services sector. However, it's important to note that the PMI reports will not be the primary driver for the SP500 today, as traders remain focused on the exceptional performance of NVIDIA stock, soaring by 14% after a strong earnings report.