US business activity accelerates in February

Business growth in the United States accelerated in February as the outbreak of Covid-19 infections subsided, but higher input prices continued to weigh amid supply constraints.

IHS Markit said on Tuesday its preliminary Composite Purchasing Managers’ Index (PMI) rose to a reading of 56.0 this month from 51.1 in January, attributing the gain to “return of employees from sick leave, increased travel and greater availability of raw materials.”

A reading above 50 indicates growth.

The composite sub-index for orders advanced to 57.5 from 55.2 in January as customers made additional purchases to avoid future price increases.

The pick-up in activity this month was broad-based, with the preliminary services PMI rising to a reading of 56.7 from 51.2 in January and a Reuters poll expectation of 53.0.

Activity also picked up in the industrial sector, with strong growth in orders and rising employment. The preliminary PMI for the sector was 57.5 in February, from 55.5 in the previous month and an expectation of 56.0.

Consumer confidence drops in February

US consumer confidence fell for a second straight month in February, with fewer consumers planning to buy homes, cars and go on vacation in the next six months amid concerns over the short-term economic outlook.

The Conference Board said on Tuesday that its consumer confidence index fell to 110.5 this month from 111.1 in January – as it was revised downwards.

Economists polled by Reuters had predicted the index would fall to 110.0 from a previous reading of 113.8 in January.

“Expectations about the short-term growth outlook have weakened further, pointing to a likely moderation in growth in the first half of 2022,” said Lynn Franco, senior director of economic indicators at The Conference Board in Washington.

“Meanwhile, the proportion of consumers planning to buy homes, automobiles, appliances and vacations in the next six months has dropped.”