WASHINGTON, D.C.: The US services sector’s activity sputtered in January, the third straight month of lower growth, a closely watched private survey showed on Wednesday (Thursday in Manila).
The Institute for Supply Management (ISM) purchasing managers index for non-manufacturing activity fell to 53.5 in January, down from 55.8 in December.
The fall in the PMI index for services was more than expected; analysts had penciled in a 55.0 reading. A number above 50 indicates growth.
Details in the report on the services sector, which accounts for about 80 percent of US economic activity, revealed broad weaknesses, including slower growth in production, new orders, employment and inventories, as well as a contraction in new export orders.
Ten of the 18 non-manufacturing industries surveyed reported expansion, led by finance and insurance. Eight said they were contracting, with mining, bearing the brunt of falling oil prices, leading the pack.
“The majority of the respondents’ comments are positive about business conditions; however, there is a concern that exists relative to global conditions, stock market volatility, and the effect on commercial and consumer confidence,” said Anthony Nieves, head of the ISM non-manufacturing survey committee.
“Watching economic slowing in other sectors, but not affected yet,” said a person in the management of companies and support services field.
A person in retail trade said that sales had improved: “We are feeling more optimism, but remain concerned about the impact of global unrest.”
The services report followed Monday’s ISM manufacturing PMI that showed activity contracted for the fourth straight month.
“This [non-manufacturing] reading certainly looks bad and will be spun as evidence the manufacturing crunch is cross-infecting the rest of the economy,” said Ian Shepherdson of Pantheon Macroeconomics.
“In all probability, it isn’t.”