Phew. Dodged a bullet.

The US services sector held up better than feared last month, a crucial update released on Wednesday suggested.

To briefly recapitulate, the preliminary read on S&P Global’s US services sector PMI for February tipped a contraction for the biggest part of the world’s largest economy. If that was accurate, it was bad news, the US being a nation of bartenders, not a nation of welders.

The stakes for ISM’s services sector PMI were accordingly high. Traders care far (far) more about the ISM surveys than S&P Global’s PMIs, so Wednesday’s above-consensus read from ISM was a welcome reprieve. At 53.5, the headline was a point ahead of estimates, and squarely in expansion territory.

Happily, the final read on S&P Global’s gauge was 51, a meaningful upward revision from the offending print mentioned above.

So, no contraction after all. Or so we’re told. The subindexes in the ISM release were solid. Indeed, as survey chair Steve Miller noted, “February was the third month in a row with all four subindexes that directly factor into the services PMI in expansion territory, the first time this has happened since May 2022.”

The employment subindex in the ISM release printed 53.9, the best showing in three years. The prices gauge, unfortunately, came in at 62.6. That’s far too high for the Fed’s liking at a time when inflation across the US services sector’s still uncomfortably warm and seemingly entrenched.

Although the numbers themselves offered some respite from an incessant run of lackluster US macro updates, both the ISM anecdotes and the editorial accompanying the S&P Global release were replete with tariff mentions and other manifestations of hand-wringing.

“Tariff actions have created chaos in information and pricing measures, forecasting and forward buys,” someone in accommodation and food services complained to ISM, adding that purchases may be “artificially inflate[d]” currently, setting up a possible “drop off.”

Chris Williamson, S&P Global’s Chief Business Economist, stuck to a cautious cadence. “The final PMI is an improvement on the earlier flash reading, but still paints a worryingly weak picture of service sector business conditions compared to the buoyancy recorded late last year,” he said.