Investing.com - U.S. services sector activity grew in February, beating expectations for a slight slowdown, but activity was still weaker than the prior month suggesting American households and businesses are bracing for the effect of Trump’s tariffs.
The S&P Global (NYSE:SPGI)’s services purchasing managers’ index came in at 51.0 last month, down from 52.9 in January. Economists had expected the figure to fall to 49.7.
Still, a PMI level above 50 denotes expansion in the key services sector, which makes up two-thirds of the U.S. economy.
This resulted in the S&P Global composite PMI index falling to 51.6 in February, below the 52.7 level seen at the start of this year.
Earlier this week, a metric tracking the manufacturing industry cooled, but remained just above the 50-point level denoting expansion. However, a separate gauge of factory gate prices surged to a three-year peak and new orders slumped, as firms expressed worries over an uncertain operating environment stemming from the tariffs.
The numbers were on the heels of tepid consumer spending, an uptick in the goods trade deficit and weak homebuilding in January -- all of which have raised concerns over possible sluggishness in the U.S. economy in the first quarter.
The numbers come after U.S. President Donald Trump imposed 25% import tariffs on Mexico and Canada, and an additional 10% levy on China.
These major trading partners promptly responded with their retaliatory tariffs, sparking fears over a global trade war, which would likely negatively impact economic activity in the world’s largest economy.