A report released by the Institute for Supply Management on Thursday showed a continued slowdown in the pace of growth in U.S. service sector activity in the month of January.
The ISM said its services PMI dipped to 59.9 in January after slumping to 62.3 in December, although a reading above 50 still indicates growth. Economists had expected the index to drop to 59.5.
With the relatively modest decrease, the services PMI continued to give back ground after reaching a record high of 68.4 in November.
The continued drop by the headline index reflected a notable slowdown in the pace of growth in business activity, with the business activity index tumbling to 59.9 in January from 68.3 in December.
The new orders index also edged down to 61.7 in January from 62.1 in December, while the employment index fell to 52.3 from 54.7.
“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,” said Anthony Nieves, Chair of the ISM Services Business Survey Committee.
“Respondents continue to be impacted by coronavirus pandemic-related supply chain issues, including capacity constraints, demand-pull inflation, logistical challenges and labor shortages,” he added. “Moreover, the COVID-19 omicron variant has disrupted operations, especially through reduced staffing levels.”
The report also showed the prices index slipped to 82.3 in January from 83.9 in December, indicating a modest slowdown in the pace of price growth.
Meanwhile, the supplier deliveries index rose to 65.7 in January from 63.9 in December, while the inventories index climbed to 49.4 from 46.7.
The ISM released a separate report earlier this week showing growth in U.S. manufacturing activity also continued to slow in the month of January.
The report said the manufacturing PMI fell to 57.6 in January from a revised 58.8 in December. The index decreased for the third straight month, slipping to its lowest level in over a year.
Economists had expected the manufacturing PMI to drop to 57.5 from the 58.7 originally reported for the previous month.
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