US Services Activity Slows More Than Expected in February, S&P Global PMI Shows

Activity in the United States services sector expanded at a slower pace than previously estimated in February, signaling a moderation in growth across the country’s largest economic segment.

According to data released by S&P Global, the US Services Purchasing Managers’ Index (PMI) fell to 51.7 in February 2026, down from 52.7 in January, marking the slowest rate of expansion in ten months. The figure was also revised downward from the preliminary estimate of 52.3 and came in well below initial market expectations of 53.

A reading above 50 indicates expansion, while a figure below that threshold signals contraction.

The slowdown reflected softer growth in new business activity, with companies reporting weaker inflows of new work during the month. Export demand in particular declined, as foreign clients remained cautious amid uncertainty surrounding global trade conditions and retaliatory measures linked to US tariff policies.

Despite the moderation in overall activity, the report pointed to continued strength in the labor market within the services sector. Firms recorded a solid increase in employment levels, supported by improved hiring conditions and a greater ability to fill previously open positions.

However, companies indicated that cost management efforts limited the pace of workforce expansion, suggesting that businesses remain cautious about longer-term demand conditions.

Input costs for service providers continued to rise, largely driven by higher labor expenses. As a result, companies passed part of these increases on to clients, leading to an acceleration in output prices during the month.

Even with the softer growth environment, business sentiment improved. Companies surveyed by S&P Global reported stronger optimism regarding future activity, citing expectations of tax relief measures and improving economic sentiment as factors supporting the outlook for the coming months.

The US services sector accounts for roughly three-quarters of US economic activity, making the PMI survey a closely watched indicator for investors and policymakers monitoring the trajectory of the broader economy.