Economic activity in the services sector, including retail, grew in January for the 20th month in a row according to the Institute for Supply Management Services Purchasing Managers Index registering 59.9%, in positive territory but down a bit from December.
The 2.4 percentage points decrease from December’s seasonally adjusted reading of 62.3 percent came as the PMI Business Activity Index registered 59.9%, a decrease of 8.4 percentage points compared to the seasonally adjusted reading of 68.3% in December, and the New Orders Index registered 61.7%, 0.4 percentage point lower than the seasonally adjusted December reading of 62.1%.
In issuing the monthly PMI report Anthony Nieves ISM Services Business Survey Committee chair noted that the Supplier Deliveries Index registered 65.7%, 1.8 percentage points higher than the 63.9% that was reported in December, adding that Supplier Deliveries is the only ISM index that is inverse with a reading of above 50% indicates slower deliveries, typical as the economy improves and customer demand increases.
“The Prices Index registered 82.3%, down 1.6 percentage points from the seasonally adjusted December figure of 83.9%. Services businesses continue to struggle replenishing inventories, as the Inventories Index, 49.4%, up 2.7 percentage points from December’s reading of 46.7%, and the Inventory Sentiment Index, registering 47.5%t, up a healthy 9.2 percentage points from December’s reading of 38.3%, remained in contraction or ‘too low’ territory in January.
“According to the Services PMI, 15 services industries reported growth. The composite index indicated growth for the 20th consecutive month after a two-month contraction in April and May 2020. Although there was a pullback for most of the subindexes in January, the rate of growth remains strong for the services sector, which has expanded for all but two of the last 144 months. Respondents continue to be impacted by coronavirus pandemic-related supply chain issues, including capacity constraints, demand-pull inflation, logistical challenges and labor shortages. Moreover, the COVID-19 Omicron variant has disrupted operations, especially through reduced staffing levels. Despite these impediments, business activity and economic growth continue.”
The 15 services industries that reported growth in January, listed in order, are: Construction, Retail Trade, Health Care & Social Assistance, Public Administration, Real Estate, Rental & Leasing, Utilities, Professional, Scientific & Technical Services, Other Services, Educational Services, Finance & Insurance, Mining, Management of Companies & Support Services, Transportation & Warehousing, Wholesale Trade, and Accommodation & Food Services. The three industries that reported a January decrease are: Agriculture, Forestry, Fishing & Hunting; Arts, Entertainment & Recreation, and Information.