US Services Gauge Cools as Pace of Orders Growth Retreats
Growth at US service providers softened at the start of the year as a measure of orders fell to a seven-month low, indicating a slight loss of momentum in the largest part of the economy.
The Institute for Supply Management’s gauge of services slipped to 52.8 in January from 54 at the end of the 2024, according to data released Wednesday. Readings above 50 signal growth, and the latest figure is slightly firmer than the average for last year.
A gauge of new orders placed with service providers declined to the lowest level since June, marking the third month in the last four of cooler demand growth. The slowdown in bookings suggests activity could moderate in coming months as some Americans tighten their belts against a backdrop of the high cost of living.
An index of prices paid by service providers for materials and services settled back in January after jumping a month earlier to the highest since 2023.
The ISM measure of business activity, which parallels the group’s factory output gauge, dropped to a five-month low.
The softer services reading contrasts with an increase in the ISM’s January manufacturing index, which showed the first month of expansion since 2022. At the same time, employment at service providers grew at the fastest pace since September 2023.
While the figures don’t detail the degree of employment growth during the month, the index may provide some reassurance that the government’s jobs report later this week will show a resilient labor market. Economists expect payrolls growth remained healthy in January after a solid close to 2024.
The pickup in employment may reflect an increase in delivery times at service providers. The ISM index of lead times rose to a three-month high.
Source : Bloomberg
