The optimistic mood has disappeared! The US S&P Global Composite Purchasing Managers' Index fell to 50.4 in February.

The latest data shows that the U.S. S&P Global Composite Purchasing Managers Index (PMI) fell to 50.4 in February, lower than January's 52.7, indicating a slowdown in overall economic activity in the U.S. private sector. Meanwhile, the manufacturing PMI rose slightly from 51.2 to 51.6, still indicating expansion in the manufacturing sector. However, the services PMI fell from 52.9 to 49.7, reflecting a weakening momentum in the industry, entering contraction territory. Following the release of the data, Chris Williamson, Chief Business Economist at S&P Global Markets, stated that market optimism for the next year has rapidly declined from near three-year highs at the beginning of the year to one of the most pessimistic expectations since the COVID-19 pandemic. He pointed out that businesses are generally concerned about the impact of federal government policies, including cutbacks in fiscal spending, tariff adjustments, and geopolitical factors. As a result of this data, the U.S. dollar index narrowed its gains during the day, falling to the 106.4 range, despite a slight increase on that day. The market made a cautious response to the complex signals of U.S. business activity data for February. S&P Global's previous February PMI forecast showed limited changes compared to the final value in January. The market is paying attention to future adjustments to the Federal Reserve's monetary policy, with most expecting a possible restart of rate cuts as early as July. In addition, influenced by PMI data expectations, the Euro against the U.S. Dollar still faces downward pressure in the short term. S&P Global's monthly PMI data, based on surveys of private sector executives, provides a forward-looking perspective on the overall health of the economy, covering key indicators such as GDP, inflation, exports, capacity utilization, employment, and inventories. Manufacturing PMI, services PMI, and composite PMI are the focus of investors, where an index above 50 represents expansion, while below 50 shows contraction. Due to the early release of PMI data compared to many official economic statistics, it is often seen as a leading indicator of economic performance. The January PMI data showed a decrease to 52.7, hitting the lowest level since April 2024, but still indicating robust business activity. S&P Global pointed out that the recovery in manufacturing production was offset by slowing service sector growth, while the speed of new orders growth slowed in January. However, employment growth accelerated to the fastest pace since June 2022, and input costs and product prices both rose at a faster pace. The market generally expected no significant fluctuation in February PMI data, with manufacturing PMI expected to rise slightly from 51.2 to 51.5, and services PMI expected to rise slightly from 52.9 to 53. As long as the service sector remains in strong growth, market confidence may remain stable. Investors will closely monitor the details of the PMI report on inflation and the job market. Federal Reserve Chairman Powell expressed caution on rate cuts in a recent semi-annual congressional hearing, with the market currently expecting the earliest possible rate cut in July. He emphasized that given stable economic growth, a strong job market, and inflation still above the 2% target, the Federal Reserve is not in a rush to adjust policy. If the services PMI unexpectedly falls below 50, the market may see a rapid sell-off of the U.S. dollar. But if the PMI data shows ongoing expansion in manufacturing and services remaining in the growth range, the dollar may strengthen against major currencies. If future PMI data shows rising input costs in the service industry and the job market remains solid, the Federal Reserve may maintain a tighter policy for a longer period. However, if price pressures ease and private sector job growth weakens, expectations for further rate cuts may increase, putting downward pressure on the dollar.