US services sector maintains fastest growth since 2024
Changes in trade policy by the Trump administration are also prompting some companies to adjust their supply chains
[NEW YORK] US service providers registered the strongest back-to-back growth since 2024 last month as business activity picked up.
The Institute for Supply Management’s (ISM) index of services was unchanged at 53.8 in January, matching the highest since October 2024, according to data released on Wednesday (Feb 4). Readings above 50 indicate expansion in the largest part of the economy.
The composition of the report painted a more nuanced picture. While a pickup in business activity underpinned the overall measure, orders growth cooled and employment barely expanded.
The ISM measure of business activity, which parallels the ISM’s factory output gauge, climbed more than two points to 57.4, the highest since October 2024.
Eleven industries reported growth last month, led by health care, utilities, construction and retail trade. Five, including transportation and warehousing, contracted.
ISM’s employment gauge showed the first back-to-back months of expansion since early last year. According to a separate report from ADP Research on Wednesday, companies added a fewer-than-expected 22,000 jobs in January.
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The new orders index, meanwhile, slipped to 53.1 from a one-year high. What’s more, the report indicated a slump in demand from overseas customers, with export bookings contracting at the fastest rate since March 2023.
The report showed an index of prices paid for services and materials climbed to a three-month high of 66.6. Changes in trade policy by the Trump administration are also prompting some companies to adjust their supply chains.
The ISM’s supplier deliveries index rose to the highest since October 2024, indicating longer lead times. BLOOMBERG
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