US service sector shows further upturn in January: report

Source:Xinhua Published: 2019/2/6 10:21:49

The latest data signaled a further upturn in business activity in January across the service sector, according to the IHS Markit on Tuesday.

The seasonally adjusted final IHS Markit US Services Business Activity Index registered 54.2 in January, down slightly from 54.4 in December. Anecdotal evidence linked the solid rise in business activity to a sustained increase in new orders and greater client demand.

The rate of expansion was the softest for four months and weaker than both the series trend and the average seen in 2018.

New business received by service providers continued to increase at a solid rate, and one that matched that seen in December. The upturn was, however, the joint-slowest since October 2017.

Service sector firms noted a decrease in foreign client demand in January, signaling the second successive month the respective seasonally adjusted index has posted below the 50.0 no change mark. The decline in new business from abroad was only fractional but was the third fall in the past six months.

The data also showed that the price pressures eased in January, with the rate of input price inflation softening to a 22-month low. The increase in cost burdens was also slower than the series trend but solid overall.

Meanwhile, the US Composite PMI Output Index posted 54.4 in January, matching that seen in December. The solid expansion was nonetheless one of the weakest seen in the last year and below the average seen in 2018.

Conversely, new business across the private sector increased at a faster pace. The upturn accelerated following a quicker rise in new orders across the manufacturing sector.

A softer rise in new export orders among manufacturers and a contraction in new business from abroad in the service sector, led to the slowest overall increase in new export business since last October.

The US Composite PMI Output Index is a weighted average of the US Manufacturing PMI Output Index and the US Services Business Activity Index.

Chris Williamson, chief business economist at IHS Markit, said, "The robust economic growth signaled by the US PMI surveys at the start of the year sits in stark contrast to the near-stalling of growth seen in Europe, China and Japan. At current levels, the surveys are consistent with annualized GDP growth of around 2.5 percent at the start of the year."

According to Williamson, however, the rates of economic growth, job creation and inflation signaled by the PMI surveys have cooled since peaks seen last year. He said that this possibly reflects some impact from the government shutdown and an easing of demand growth, notably from abroad.

"Foreign sales of goods and services barely rose in January, contrasting with signs of faster growth of domestic orders," he said.

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