US services sector growth slows in January - ISM
Growth in the US services sector slowed more than expected in January, according to data released on Tuesday.
The Institute for Supply Management's services index fell to 56.7 from 58.0 in December, missing expectations for a reading of 57.2.
The non-manufacturing business activity index fell to 59.7 in January from 61.2 the month before.
Meanwhile, the new orders index came in at 57.7 compared to 62.7 in December, while the employment index increased to 57.8 from 56.6. The prices index printed at 59.4 from 58.0 in December.
Respondents cited concerns about the impact of the government shutdown but remained mostly optimistic about overall business conditions, the survey found.
Pantheon Macroeconomics said: "We had hoped for better, but it seems likely that the government shutdown, which temporarily hit consumers’ confidence, has infected the ISM non-manufacturing survey too. The headline index usually tracks the rate of growth of core retail sales, which seem to have been very strong at the end of last year, but consumer-facing business can be forgiven for feeling nervous as the shutdown lengthened. We hope for a rebound next time.
"The key detail behind the headlines is the increase in the employment index, up 1.2 points to 58.8. That’s the first increase in four months, following the decline triggered by the Q4 drop in stock prices. The September peak was 60.4, so the January rebound does not recover all the lost ground, but in recent years readings of 58.8 have been consistent with payroll growth of about 250K, so the net decline from September is not an barrier to further strong payroll numbers. In short, the non-manufacturing economy is still in very good shape, but the Fed appears to care mostly about the manufacturing sector, which is less than fifth of the size."