Investing.com - Business activity in the U.S. private sector slowed its expansion in February, from what had been a 14-month peak, dampening optimism over the American economy, according to preliminary data released on Tuesday.
In a report, market research group Markit said that its flash services purchasing managers’ index (PMI) eased to 53.9 in February, from the prior month’s reading of 55.6 which had been its fastest expansion since November 2015.
Analysts had expected the reading to increase to 55.8.
Services make up approximately 80% of the U.S. economy which makes the data key for interpreting growth.
Markit also said that its flash manufacturing purchasing managers’ index (PMI) fell to 54.3 in February from the prior month’s final reading of 55.0.
Analysts had expected a slight increase to 55.3.
On the indices, a reading above 50.0 indicates expansion, below indicates contraction.
The report indicated that the slowdown was largely due to the services sector while manufacturing activity remained on track to record its fastest quarterly rate of growth in two years.
However, Markit noted that the latest survey showed that business optimism had moderated.
“Measured overall, survey respondents were the least upbeat about the growth outlook since September 2016,” the report said.
“The drop in the flash PMI numbers for February suggest that the post-election upturn has lost some momentum,” Markit chief economist Chris Williamson said.
“Growth of business output, new orders and hiring all waned, as did inflationary pressures,” he noted.
However, Willamson pointed out that, even with the weak numbers, the surveys were consistent with the economy growing at a 2.5% annualized rate in the first quarter.
Following the report, EUR/USD traded at 1.0547 from 1.0533 prior to the release, GBP/USD was at 1.2443 from 1.2416 earlier, while USD/JPY was at 113.45 compared to 113.70 previously.
The US dollar index, which tracks the greenback against a basket of six major rivals, was at 101.37, compared to 101.53 ahead of the report.
Meanwhile, U.S. stocks were trading higher after the open. The Dow 30 gained 94 points or 0.46%, the S&P 500 rose 10 points, or 0.41%, while the tech-heavy Nasdaq Composite advanced 23 points or 0.40%.
Elsewhere, in the commodities market, gold futures traded at $1,234.35 a troy ounce, compared to $1,228.95 ahead of the data, while crude oil changed hands at $54.73 compared to $54.77 previously.