U.S. business activity unexpectedly rebounded in February, reaching its highest level in eight months, according to a survey on Tuesday, which also showed inflation subsiding.
That ended seven straight months of the index being below the 50 mark, which indicates contraction in the private sector. The services sector accounted for the rise in business activity, while manufacturing remained weak. Economists polled by Reuters had forecast the flash Composite PMI Output Index at 47.5.
The rebound in business activity fits in with recent robust data on retail sales, the labour market and manufacturing production, which have suggested solid momentum in the economy at the start of the year. The flash composite new orders index rose to 48.6 this month from a final reading of 47.8 in January. According to S&P Global, “customer hesitancy, destocking and the impact of higher interest rates and inflation on spending” were cited as factors weighing on new orders.