US: Markit Manufacturing PMI drops to 50.8 (preliminary) in February vs. 51.5 expected

The economic activity in the US manufacturing sector in February is expected to expand at a softer pace than it did in January with the IHS Markit's Manufacturing PMI dropping to 50.8 in its advanced print from 51.9 in January. This reading came in worse than the market expectation of 51.5.

Additionally, the IHS Markit's Services PMI dropped below the 50 mark in February to point to a contraction in the sector's activity. At 49.4, the Services PMI recorded its lowest reading in more than six years. Finally, the Composite PMI fell to 49.6 from 53.3.

Commenting on the data, “with the exception of the government-shutdown of 2013, US business activity contracted for the first time since the global financial crisis in February," noted Chris Williamson, Chief Business Economist at IHS Markit. "Weakness was primarily seen in the service sector, where the first drop in activity for four years was reported, but manufacturing production also ground almost to a halt due to a near-stalling of orders."

According to Williamson, the deterioration in part was caused by the coronavirus outbreak's negative impact on the demand across sectors such as travel and tourism, as well as on exports and supply chain disruptions. 

USD reaction 

The greenback came under heavy selling pressure following the disappointing PMI data. The US Dollar Index, which touched a fresh multi-year high of 99.91 on Thursday, was last seen erasing 0.45% on the day at 99.43.