Growth in the service-sector PMI slowed in February, to 53.8 from a mid-month flash of 53.9 and well down from January's level of 55.6. Though this is the lowest reading in five months, the report's sample remains upbeat citing new contracts and the launch of new products. But backlogs are also down and hiring, though still described as solid, has slowed. Cost pressures for inputs are down and traction for selling prices is slowing with some respondents reporting price discounts. And optimism isn't quite as strong as it was, in fact is now back to where it was in September and before the November election.
The ISM non-manufacturing report follows later this morning and if it, a report that has been running consistently strong, shows similar weakness, expectations for first-quarter GDP and also perhaps next week's employment report could suffer. Also released with this report is the composite service-sector and manufacturing index which edged 2 tenths lower from the flash to 54.1 and down from January's 55.8.