EU Unemployment Rate Falls to 5.8%, Hitting Another Record Low; Demographic Shift Supports Tight Labor Market

US February ISM Services PMI Soars to 56.1, Hitting a Three-and-a-Half-Year High, as Inflation Worries Resurface

According to the latest data, the US February ISM Non-Manufacturing Index (NMI) recorded 56.1, a significant jump of 2.3 percentage points from the previous value of 53.8, and far exceeding market consensus expectations of 53.5. This data not only marks two consecutive months of expansion but also sets the highest level since August 2022, showing that the US service sector is demonstrating surprisingly resilient momentum at the beginning of 2026, significantly increasing the probability of a "No Landing" for the economy. Observing the sub-indices, performance on the demand side was particularly outstanding. The "Business Activity Index" rose to 59.9 (previous value 57.4), hitting a new high since September 2024; the "New Orders Index" surged by 5.5 percentage points to 58.6, marking the largest increase in 17 months, reflecting strong consumer demand and corporate capital expenditure willingness. Meanwhile, the "Employment Index" also rose from 50.3 to 51.8, indicating that service sector employers are expanding hiring again amidst recovering demand, and the labor market remains tight. Institutional analysis points out that the broad-based acceleration in the service sector mainly benefits from resilient domestic demand and improved supply chain conditions. ISM Committee Chair Steve Miller stated that the service sector is in a "warming up" phase, with most industries reporting improved order visibility, though he also mentioned uncertainties regarding tariff impacts and geopolitics. Bloomberg analysis also believes that, as the service sector accounts for over 70% of the US economy, such strong expansion data suggests that the first-quarter GDP growth rate may be revised upward. Looking ahead, the market focus in the short term will be locked on "inflation stickiness." Although the "Prices Index" fell slightly from the previous month's 66.6 to 63.0 in February, the absolute value remains at a historical high and has been above the 60 boom-bust line for 15 consecutive months, indicating that wage and input cost pressures remain. If the price sub-index cannot cool down effectively in the coming 1-2 months, the Federal Reserve (Fed) will face greater constraints on monetary policy, and it is not ruled out that "High for Longer" will be maintained for a longer period. In the medium term (3-6 months), attention needs to be paid to the potential impact of geopolitics on oil prices and the uncertainty of tariff policies. Although the demand side is currently sufficient to pass on costs, if the situation in the Middle East worsens and pushes up energy prices, superimposed on existing inflation pressures in the service sector, it may compress corporate profit margins and trigger concerns about stagflation. Investors should closely monitor the sustainability of new orders and price trends next month as key signals for judging whether the economy is overheating. Online Search References: https://tradingeconomics.com/united-states/non-manufacturing-pmi https://think.ing.com/snaps/soaring-us-services-clouds-the-fed-rate-cut-story/