US: S&P Services PMI improves to 50.5 in February vs. 47.2 expected

• S&P Global Services PMI recovered above 50 in February's flash estimate.
• US Dollar Index continues to push higher above 104.00.

Business activity in the US services sector expanded in early February following January's contraction with S&P Global Services PMI rising to 50.5 from 46.8 in January. This reading surpassed the market expectation of 47.2.

Additionally, the Manufacturing PMI edged higher to 47.8 from 46.9, compared to analysts' estimate of 47.3, and the Composite PMI improved to 50.2 from 46.8.

Commenting on the data, "February is seeing a welcome steadying of business activity after seven months of decline," said Chris Williamson, Chief Business Economist at S&P Global Market Intelligence.

"The improved supply situation has taken price pressures out of manufacturing supply chains but the survey data underscore how the upward driving force on inflation has now shifted to wages amid the tight labor market," Williamson added. "By potentially stoking concerns over a wageprice spiral, accelerating service sector price growth will add to calls for higher interest rates, which could in turn subdue the nascent expansion."

Market reaction

The US Dollar gathered strength against its rivals with the initial reaction and the US Dollar Index was last seen rising 0.35% on the day at 104.22.