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[NEW YORK] US services sector growth rebounded modestly in January but companies reported the weakest level of new business growth in more than five years, an industry report showed on Tuesday.
Financial data firm Markit said its preliminary, or "flash,"reading of its Purchasing Managers Index for the service sector rose to 54.0 in January from 53.3 in December, which had matched a 10-month low.
The January figure marked the first rise in the index since it peaked in June with a reading of 61. A reading above 50 level separates expansion from contraction.
The report follows a disappointing reading of manufacturing activity, also from Markit, released last week that showed that sector's growth at a one-year low.
"The January manufacturing and services surveys collectively recorded the weakest monthly increase in new orders since the recession, sending a major warning light flashing that growth of demand has continued to slow at the start of the year," said Chris Williamson, chief economist at Markit.
"The 5.0 per cent annualized rate of GDP (gross domestic product) expansion in the third quarter certainly looks like a peaking in the pace of expansion, with the surveys pointing to 2.5 per cent annualized growth at the start of the year."
The new business subindex fell to 51.4, the lowest reading in the history of the Markit services sector series, which dates from October 2009. December's level was 52.9.
The employment subindex slipped for a second straight month to the lowest since last April, but remained above 50.
Markit's composite PMI, a weighted average of its manufacturing and services indexes, edged up to 54.2 in January from 53.5 in December.