U.S services sector performs well above the expectations in February despite the Coronavirus disruptions

The Institute of Supply Management released its report on the U.S non-manufacturing purchasing managers’ index (PMI) on Wednesday. The data suggested the U.S services sector to have performed well in February despite the rising Coronavirus complications that are weighing heavily on the global economy. Wednesday’s data helped fuel optimism regarding the U.S economy.

While the U.S Federal Reserve resorted to an emergency rate cut on Tuesday to help support economic growth in the United States, the ISM non-manufacturing PMI was recorded at 57.3 in February versus a much lower 55.5 noted in January. In a previous estimate, analysts had forecast the U.S services sector to contract to 54.9 in February.

Keeping well above the neutral 50-mark, Wednesday’s data suggested continued expansion in the U.S services sector despite the health emergency that continues to disrupt global business operations.

Coronavirus Has Affected Over 100 People In The U.S And Caused 9 Deaths So Far

Following the first emergency rate cut since the financial crisis of 2008, however, the chairman of the U.S Federal Reserve, Jerome Powell, reiterated the Coronavirus emergency is likely to weigh on the U.S economic activity in the upcoming months. The virus has so far affected over 100 people in the United States while the death toll is currently at 9.  

Wednesday’s economic data also registered the sub-index of business activity at 57.8 in February that came out relatively weaker than January’s 60.9 reading. The new orders sub-index also climbed significantly to 63.1 in February as compared to a much lower 56.2 that was recorded in January. In terms of order backlogs, ISM announced the sub-index to have recovered sharply last month after January’s contraction. Lastly, the employment sub-index also stirred optimism with a reading of 55.6 in February as compared to January’s 53.1. On the export orders’ front, the U.S services sector also suggested improvement in February.

ISM Posts Positive Readings From 16 Services Industries In February

The positive readings from the U.S services sector improved the economists’ expectations that February’s job growth data that is scheduled to be released on Friday is likely to come out stronger than the forecast.

The ISM accentuated 16 services industries to have posted growth in February. While the majority of the respondents were concerned about the health emergency and its subsequent impact on the supply chain, they expressed confidence in business conditions and the U.S economy at large.

The EUR/USD currency pair continued to trade between 1.1100 and 1.1150 following the economic data on Wednesday. At the time of writing, the pair has climbed to 1.1170 and seems confident to challenge the 1.12 crucial resistance again.