ISM: Service sector expanded in January

The ISM Services index increased 2.9 percentage points (pp) to 53.4%—the 13th consecutive month of expansion for the services sector.

“Ten industries reported growth in January. The Services PMI®, by being above 50 percent for the 13th consecutive month (after a single month of contraction in December 2022 and a prior 30-month period of expansion), continues to indicate sustained growth — and at a faster rate in January — for the sector,” said Anthony Nieves, Chair of the ISM Services Business Survey Committee.

The Business Activity Index remained unchanged at 55.8% in January. The Supplier Deliveries Index indicated slower performance after three consecutive months in faster territory, registering 52.4%, up 2.9 pp from December. In the last 12 months, the average reading of 48.6% (with a low of 45.8 in March) reflects the fastest supplier delivery performance since December 2022. (A reading of below 50 percent indicates faster deliveries.) The Prices Index registered 64% in January, a 7.3 pp increase from December. Respondents commented: “Transportation impacts of the Suez Canal, due to unrest in the Red Sea and the issues at the Panama Canal are impacting both costs and schedule for the transport of global goods” (Construction) and “Increase in activity; expecting a busy 2024.” (Finance & Insurance)

The Inventories Index contracted in January, registering 49.1%, a decrease of 0.5 pp, and the Employment index registered 50.5%, up 6.7% from December. Respondents commented: “The district is seeing higher-than-normal turnover as workers are being aggressively pursued by districts offering higher wages.” (Utilities)

The Inventory Sentiment Index grew for the ninth consecutive month in January after one month of contraction in April, preceded by four consecutive months of growth and four months of contraction from August to November 2022. The index registered 59.3%, a 4-pp increase from December. This reading indicates that respondents feel their inventories are too high when correlated to business activity levels.

Read the ISM release.