U.S. service sector activity surges in February, IHS service PMI rises to 55.9

Business activity throughout the U.S. service sector grew sharply in the month of February. The latest seasonally adjusted final IHS Markit Services Business Activity Index rose to 55.9 in February from 53.3 in January. After a nine-month low in the previous survey period, the pace of growth in business activity rose to the most rapid since August 2017. Service providers usually linked the sharp rise in output to greater client demand.

More favorable demand conditions drove the latest rise in new business, with panelists attributing the upturn to the acquisition of new clients and investment in new facilities. Furthermore, the pace of growth accelerated for the second straight month to the most rapid in nearly three years.

On the prices front, cost burdens faced by service providers continued to rise in February. The pace of input price inflation accelerated to the most rapid since June 2015. Where higher input costs were reported, panelists commonly attributed this to higher fuel and raw material prices. In the meantime, amidst larger cost burdens and greater client demand, average charges also rose further as companies protected margins. Furthermore, the rate of inflation accelerated to the sharpest for five months.

Consistent with expansions in output and new business, companies increased their hiring in February. Higher employment levels were commonly linked to greater capacity requirements, with the latest rise in payroll figures reaching a six-month high. Capacity pressures were also seen in a strong rise in the level of outstanding business. The pace of order book accumulation strengthened for the third straight month to reach the highest in nearly three years.

Finally, business expectations towards the year ahead outlook continued to be elevated in February. The extent of positivity reached a 13-month high, with a number of panel members attributing sentiment to upcoming marketing campaigns and more favorable domestic economic conditions.

At 15:00 GMT the FxWirePro's Hourly Strength Index of US Dollar was neutral at -7.47334. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

FxWirePro launches Absolute Return Managed Program. For more details, visit http://www.fxwirepro.com/invest