In the latest Institute for Supply Management Report On Business, economic activity in the services sector expanded in January after contracting in December following 30 consecutive months of growth.
Based on research conducted with purchasing and supply executives, the ISM Services Purchasing Managers Index registered 55.2% in January versus $49.2% in December. The 50% line divides expansion from contraction.
Anthony Nieves, chair of ISM’s Services Business Survey Committee, noted that the six percentage point gain in January versus December reversed the first services PMI contraction that has occurred since May 2020, when it registered 45.4% seasonally adjusted.
“The Business Activity Index registered 60.4%, a 6.9-percentage point increase compared to the seasonally adjusted reading of 53.5% in December,” he noted. “The New Orders Index grew in January after contracting in December for the first time since May 2020. The figure of 60.4% is 15.2 percentage points higher than the seasonally adjusted December reading of 45.2%. The Supplier Deliveries registered 50% in January, indicating unchanged performance. The index registered 1.5 percentage points higher than the 48.5% reported in December. Supplier Deliveries is the only ISM Report On Business index that is inversed: A reading of above 50% indicates slower deliveries, which is typical as the economy improves and customer demand increases. The Prices Index was down 0.3 percentage point in January, to 67.8%. The Inventories Index contracted for the eighth consecutive month. The reading of 49.2% is up 4.1 percentage points from December’s figure of 45.1%. The Inventory Sentiment Index, 55.8%, down 0.1 percentage point from December’s reading of 55.9%, expanded for the second consecutive month after four straight months in contraction.”
Nieves added that the ISM research “indicated that capacity and logistics performance continues to improve. Although responses varied by industry and company, the majority of panelists indicated that business is trending in a positive direction. Employment was unchanged for the month. Some companies still find it difficult to fill open positions, while others are facilitating staff reductions.”
Listed in order of growth, ISM maintained, the 10 services industries reporting gains in January are: Agriculture, Forestry, Fishing & Hunting; Utilities; Other Services; Management of Companies & Support Services; Public Administration; Educational Services; Accommodation & Food Services; Real Estate, Rental & Leasing; Health Care & Social Assistance; and Professional, Scientific & Technical Services. The eight industries reporting a January decrease are Transportation & Warehousing; Retail Trade; Arts, Entertainment & Recreation; Mining; Construction; Information; Finance & Insurance; and Wholesale Trade.
