The Institute
for Supply Management (ISM) reported on Monday that its Services PMI came in at
53.4 per cent in January 2024, recording a gain of 2.9 percentage points from a
downwardly unrevised December 2023 reading of 50.5 per cent (from 50.6 per cent).
The latest figure indicated that the U.S. services sector expanded for the 13th straight month and at a
faster pace than in the previous three months.
Economists had predicted
the indicator to rise to 52.0 in January.
A reading above
50 signals expansion, while a reading below 50 indicates contraction.
Of the 18
services industries, ten reported growth last with the month majority of respondents indicating that
business is steady. “They are optimistic about the economy due to the potential
impact of interest rate cuts; however, they are cautious due to inflation,
associated cost pressures and ongoing geopolitical conflicts," Anthony
Nieves, the Chair of the ISM Services Business Survey Committee, added.
According to
the report, the Production index remained unchanged at 55.8 per cent in January, indicating
growth in output for the 44th month in a row. Meanwhile, the New Orders gauge increased
2.2 percentage points to 55.0 per cent, indicating expansion for the 13th consecutive
month. In addition, the Employment measure surged 6.7 percentage points to 50.5
per cent, indicating employment activity in the services sector returned into
expansion territory after one month of contraction. The Supplier Deliveries
indicator jumped 2.3 percentage points to 52.4 per cent, indicating slower
performance after three consecutive months of faster performance. Elsewhere, the Inventories indicator slipped 0.5 percentage
point to 49.1 per cent, indicating a shrinkage of inventories for the second successive
month, and at a faster rate in January. The Backlog of Orders index climbed 2.2
percentage points to 51.4 per cent, indicating an increase in order backlogs in
January after two consecutive months of contraction.
On the price front, the Prices index surged 7.3 percentage points to 64.0 per cent, indicating that prices paid
by services organizations for materials and services increased in January for
the 80th month running. Noteworthy, this month-over-month advance is the largest since
August 2012 (9.3 percentage points).