The S&P Global US Services PMI declined to 51.7 in February 2026 from 52.7 in January, revised down from the preliminary estimate of 52.3 and coming in well below the initial market forecast of 53. This marked the slowest pace of expansion in the US services sector in ten months.
New business continued to grow but at a more moderate rate, constrained by a drop in export orders as foreign clients remained cautious amid uncertainty over trade policies and retaliatory tariffs on US goods. Even so, firms reported solid growth in employment, helped by an easing in the difficulty of filling existing vacancies, while cost-cutting initiatives curbed a more pronounced expansion in headcount.
Higher labor costs pushed input inflation for service providers higher, leading to faster increases in output prices. Despite the signs of softening activity, companies became more optimistic about the outlook for future business, supported by tax breaks and improved overall economic sentiment.