The US saw the release of strong economic news on Tuesday, as US Business Activity hit an eight-month high in February.

The Flash United States PMI Composite Output Index, which tracks both the services and the manufacturing Business activity, came in at 50.2 in February, rising by 3.4 index points from January’s final reading of 46.8.

February’s figure was significant for two reasons. First, the latest data ended a seven-month consecutive streak of readings below the key 50 mark. Secondly, readings below 50 indicate an economy in contraction. Meanwhile, readings above 50 indicate an economy in growth.

Encouraging US Growth

The February US Business Activity reading was also better than the markets had anticipated. Economists had expected a reading of 47.5.

Manufacturing PMI also rose in February The manufacturing PMI rose by 0.9 index points to 47.8, the strongest figure in four months. Meanwhile, the Services Business Activity Index hit an eight-month high of 50.5 after gaining 3.7 index points from January’s reading.

The Manufacturing Output Index increased by 1.5 index points to 48.4, the highest it has been in four months.

Chris Williamson, chief business economist at S&P Global Market Intelligence, said:

“Despite headwinds from higher interest rates and the cost of living squeeze, the business mood has brightened amid signs that inflation has peaked and recession risks have faded.”

“At the same time, supply constraints have alleviated to the extent that delivery times for inputs into factories are improving at a rate not seen since 2009.”

Chris Williamson, chief business economist at S&P Global Market Intelligence.

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