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Expand chart
Data: Investing.com; Chart: Danielle Alberti/Axios

The U.S. economy has taken a significant hit so far in February, due in part to the coronavirus outbreak.

By the numbers: The all-important U.S. services sector contracted for the first time in four years, data released Friday from IHS Markit showed, and fell to its lowest level in more than six years.

  • The composite index, which includes services and manufacturing, dropped to its lowest in six years, ending a nearly four-year period of expansion.

Why it matters: The services sector accounts for more than two-thirds of the U.S. economy and held up remarkably well last year as the U.S.-China trade war ravaged manufacturing and sent the industry into recession.

Warning: The rate of decline for new business was the strongest in the history of the survey, dating back to October 2009, and total new orders fell for the first time in more than a decade, according to IHS Markit.

Reality check: Economists largely expect the negative impact of the coronavirus to recede after the second quarter, but IHS Markit chief economist Chris Williamson warned that it was not the only issue weighing on this month's readings.

"The deterioration in was in part linked to the coronavirus outbreak, manifesting itself in weakened demand across sectors such as travel and tourism, as well as via falling exports and supply chain disruptions."
"However, companies also reported increased caution in respect to spending due to worries about a wider economic slowdown and uncertainty ahead of the presidential election later this year."

But, but, but: Friday's reading was a flash estimate of the current month and IHS Markit, along with data provider ISM, will release a deeper look at February's manufacturing and services in early March.

Go deeper: Economists warn coronavirus risk far worse than realized

Go deeper

Updated 7 hours ago - Politics & Policy

Omicron dashboard

Illustration: Brendan Lynch/Axios

  1. Health: Pfizer and Moderna boosters overwhelmingly prevent Omicron hospitalizations, CDC finds — Omicron pushes COVID deaths toward 2,000 per day — The pandemic-proof health care giant.
  2. Vaccines: The case for Operation Warp Speed 2.0 — Starbucks drops worker vaccine or test requirement after SCOTUS ruling — Kids' COVID vaccination rates are particularly low in rural America.
  3. Politics: Biden concedes U.S. should have done more testing — Arizona says it "will not be intimidated" by Biden on anti-mask school policies — Federal judge blocks Biden's vaccine mandate for federal workers.
  4. World: American Airlines flight to London forced to turn around over mask dispute — WHO: COVID health emergency could end this year — Greece imposes vaccine mandate for people 60 and older — Austria approves COVID vaccine mandate for adults.
  5. Variant tracker

Arizona governor sues Biden administration over COVID funds tied to mandates

A teacher prepares a hallway barrier to help students maintain social distancing at John B. Wright Elementary School in Tucson, Arizona, on Aug. 14, 2020. Photo: Cheney Orr/Bloomberg via Getty Images

Arizona Gov. Doug Ducey (R) filed a lawsuit Friday against the Biden administration for ordering the state to stop allocating federal COVID relief funds to schools that don't comply with public health recommendations such as masking, the Arizona Republic reports.

Why it matters: The Treasury Department said last week that the state would have to pay back the money if Ducey does not redesignate the $173 million programs to ensure they don't "undermine efforts to stop the spread of COVID-19."

Federal judge blocks Biden's vaccine mandate for federal workers

President Biden speaking from Eisenhower Executive Office Building on Jan. 21. Photo: Yuri Gripas/Abaca/Bloomberg via Getty Images

A federal judge in Texas blocked the Biden administration from enforcing its coronavirus vaccine mandate for federal workers on Friday, citing the outcome of last week's Supreme Court ruling that nullified the administration's vaccine-or-test requirement for large employers.

Why it matters: It's a blow to President Biden's efforts to increase the U.S.' vaccination rates, though much of the federal workforce has already been vaccinated against the virus.