US services industry continues to chug on solidly in new year

 
Ben Southwood
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US SERVICE sector activity increased for the 39th straight month in January, according to numbers put out yesterday afternoon.

The Institute of Supply Management’s (ISM) overall index for the top sector in the economy crept down 0.5 percentage points, leaving it at 55.2 per cent – where an index level of 50 indicates no change.

The sub-index for employment shot up 2.2 percentage points to 57.5 per cent, the highest for nearly seven years, just after last week’s jobs report revealed 166,000 new private sector jobs.

Paul Dales, US economist at Capital Economics, said the upbeat numbers could imply growth had rebounded from last quarter’s surprise 0.1 per cent annualised fall to hit 2.5 per cent growth in the first quarter of this year. With the solid rise in the employment sub-index, Dales judged that “lingering fiscal uncertainty” did not appear to be harming macroeconomic prospects.

“Respondents’ comments are mixed, however, the majority of respondents are optimistic about the overall direction [of the economy],” commented ISM chair Anthony Nieves.