Markit Economics released its preliminary services purchasing managers' index (PMI) for the U.S. on Wednesday. The U.S. preliminary services purchasing managers' index (PMI) dropped to 49.8 in February from 53.2 in January. It was the lowest level since October 2013.

Analysts had expected the index to rise to 53.5.

A reading below 50 indicates contraction in economic activity.

The drop was driven by a softer growth in new work, the slowest since late-2009.

"The PMI survey data show a significant risk of the US economy falling into contraction in the first quarter. The flash PMI for February shows business activity stagnating as growth slowed for a third successive month. Slumping business confidence and an increased downturn in order book backlogs suggest there's worse to come," Markit Chief Economist Chris Williamson said.