Sections: Economy

U.S. Service Sector Growth Cools in January, Activity Falls to 2-Year Low

A service sector employee sits at his desk. (Photo: REUTERS)

The Institute for Supply Management’s Report on Business (NMI), a gauge of service-sector growth slowed to 53.5 last month from 55.8 in December. The NMI reading was well below expectations for a much smaller decline to 55.1 and was the lowest since February 2014. Readings above 50 indicate expansion, while those below point to contraction.

The 10 non-manufacturing industries reporting growth in January — listed in order — are: Finance & Insurance; Real Estate, Rental & Leasing; Utilities; Retail Trade; Information; Construction; Agriculture, Forestry, Fishing & Hunting; Health Care & Social Assistance; Management of Companies & Support Services; and Public Administration. The eight industries reporting contraction in January — listed in order — are: Mining; Educational Services; Wholesale Trade; Other Services; Arts, Entertainment & Recreation; Accommodation & Food Services; Transportation & Warehousing; and Professional, Scientific & Technical Services.

ISM^® NON-MANUFACTURING SURVEY RESULTS AT A GLANCE COMPARISON OF ISM^® NON-MANUFACTURING AND ISM^® MANUFACTURING SURVEYS* JANUARY 2016
	Non-Manufacturing						Manufacturing
Index	Series Index Jan	Series Index Dec	Percent Point Change	Direction	Rate of Change	Trend** (Months)	Series Index Jan	Series Index Dec	Percent Point Change
NMI^®/PMI^®	53.5	55.8	-2.3	Growing	Slower	72	48.2	48.0	+0.2
Business Activity/Production	53.9	59.5	-5.6	Growing	Slower	78	50.2	49.9	+0.3
New Orders	56.5	58.9	-2.4	Growing	Slower	78	51.5	48.8	+2.7
Employment	52.1	56.3	-4.2	Growing	Slower	23	45.9	48.0	-2.1
Supplier Deliveries	51.5	48.5	+3.0	Slowing	From Faster	1	50.0	49.8	+0.2
Inventories	51.5	53.0	-1.5	Growing	Slower	10	43.5	43.5	0.0
Prices	46.4	51.0	-4.6	Decreasing	From Increasing	1	33.5	33.5	0.0
Backlog of Orders	52.0	50.0	+2.0	Growing	From Unchanged	1	43.0	41.0	+2.0
New Export Orders	45.5	53.5	-8.0	Contracting	From Growing	1	47.0	51.0	-4.0
Imports	46.0	49.0	-3.0	Contracting	Faster	2	51.0	45.5	+5.5
Inventory Sentiment	61.5	64.5	-3.0	Too High	Slower	224	N/A	N/A	N/A
Customers’ Inventories	N/A	N/A	N/A	N/A	N/A	N/A	51.5	51.5	0.0
Overall Economy				Growing	Slower	78
Non-Manufacturing Sector				Growing	Slower	72

* Non-Manufacturing ISM^® Report On Business^® data is seasonally adjusted for Business Activity, New Orders, Prices and Employment Indexes. Manufacturing ISM^® Report On Business^® data is seasonally adjusted for New Orders, Production, Employment and Supplier Deliveries.

** Number of months moving in current direction.
Indexes reflect newly released seasonal adjustment factors.

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PPD Business Staff

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