US business activity growth came close to stalling in February, according to flash PMI survey data, as a renewed fall in services output offset faster manufacturing growth.
New order growth also weakened sharply and business expectations for the year ahead slumped amid growing concerns and uncertainty related to federal government policies.
The upturn in manufacturing output was also in part linked to the front-running of tariffs, hinting at merely a temporary boost.
Input cost pressures meanwhile spiked higher, notably in manufacturing as suppliers passed on tariff-related price hikes and wage pressures persisted.
However, intensifying competition helped limit the pass through of selling prices in the services sector, where inflation sank to a near five-year low.
The headline S&P Global US PMI Composite Output Index sank to 50.4 in February from 52.7 in January.
Weakness was centered on the services economy, where output fell slightly in February to signal the first contraction of the sector for 25 months, representing a sharp contrast to the robust expansion seen late last year.
The S&P Global Flash US Manufacturing PMI rose from 51.2 in January to 51.6 in February, signaling a second successive monthly improvement in business conditions within the goods-producing sector and the sharpest upturn recorded since last June.
Factory production rose for a second month in February, increasing at the steepest rate for 11 months. The drag from falling input inventories also eased to the lowest since last June, helping to lift the PMI.