• U.S. S&P Global (SPGI) February flash PMIs for Manufacturing (51.2), Services (52.3), and Composite (52.3) all fell short of expectations, signaling a deceleration in private sector growth.
  • The Composite PMI declined from 53.0 in January, reflecting softer expansion midway through Q1 2026, though all indices remain above the 50 threshold indicating ongoing economic activity.
  • Rising input costs led to faster selling price increases, while export orders in manufacturing declined for a seventh consecutive month amid persistent trade uncertainties.

A Cooling Pace of Growth

Preliminary readings from S&P Global's February 2026 flash Purchasing Managers' Indexes (PMIs) revealed a broader slowdown in U.S. economic expansion, with all three key measures missing analyst forecasts. The Manufacturing PMI came in at 51.2, well below the anticipated 52.6, while Services registered 52.3 against expectations of 53.0. The Composite PMI, which blends both sectors, dipped to 52.3 from 53.0 in January, marking a noticeable deceleration in private sector activity early in the first quarter.

"The data suggests growth is moderating more than we had projected," said one economist familiar with the survey, who spoke on condition of anonymity due to the sensitivity of early estimates. Efforts to reach S&P Global for additional comment were not immediately successful. The flash PMIs, based on early survey responses from purchasing managers, indicate that while the U.S. economy continues to expand—all readings stayed above the 50 no-change mark—the pace has softened considerably compared to recent months.

Sector-Specific Pressures

Manufacturing output and new orders grew modestly in February, but export orders declined for a seventh straight month, a trend attributed by insiders to ongoing trade uncertainties and tariff pressures. In services, growth decelerated slightly amid subdued demand and easing job creation, with hiring easing to a three-month low despite overall positive trends. Input costs rose across both sectors, leading to faster increases in selling prices, which could squeeze margins for businesses and potentially translate to higher costs for consumers down the line.

Business confidence remained subdued, according to survey respondents, who cited geopolitical risks and policy frictions as key drags. This contrasts with improving conditions in the Eurozone, where flash PMIs showed a manufacturing-led upturn, with the Composite PMI hitting a three-month high of 51.9 and Manufacturing reaching a 44-month peak. Germany's Composite PMI, for instance, rose to a four-month high of 53.1, with manufacturing above 50 for the first time in 3.5 years.

Implications and Market Watch

The misses in U.S. PMIs could signal Q1 GDP growth falling short of earlier expectations, with risks intensifying from inflationary pressures and weak order books. Analysts are closely watching for potential implications on Federal Reserve policy, particularly regarding interest rate decisions in the coming months. While the flash estimates had anticipated gains, final readings due later in the month may adjust slightly based on complete survey data.

Globally, the J.P. Morgan (JPM) Global Composite PMI rose to 52.5 in January from 52.0 in December, driven by manufacturing gains and consistent with annualized GDP growth around 2.6%—still below pre-pandemic averages. The U.S. weakness in February stands in stark relief to these broader trends, highlighting regional divergences in economic momentum. As one market strategist noted, "The U.S. is seeing a tempering of expansion just as Europe picks up steam, which could reshape investment flows in the near term."