US service sector off to strong start in 2017, Markit says

Service sector activity in the States accelerated by much more than expected at the start of 2017, according to one of the most widely-followed barometres of activity.

IHS Markit´s service sector purchasing managers´ index rose from 53.9 in December to 55.1 in January, surpassing forecasts for an improvement to 54.4.

A sub-index of incoming new work saw a "strong increase" and service providers were more upbeat about the business outlook than at any other time since May 2015, the survey compiler said.

“Although the strong dollar is hitting exports, domestic demand clearly remains buoyant. Companies reported one of the highest inflows of new business for a year and a half as demand lifted higher at the start of 2017.

“The strong start to 2017 and bullish mood for the year ahead adds to our expectation that we will see the Fed hike rates a further three times in 2017,” said Chris Williamson, chief business economist at IHS Markit.