U.S. Services Index Unexpectedly Indicates Modestly Slower Growth In January

(RTTNews) - Service sector growth in the U.S. unexpectedly slowed modestly in the month of January, according to a report released by the Institute for Supply Management on Wednesday.

The ISM said its services PMI dipped to 52.8 in January from a revised 54.0 in December. While a reading above 50 still indicates growth, economists had expected the index to inch up to 54.3 from the 54.1 originally reported for the previous month.

The unexpected decrease by the headline index came amid slower growth by both business activity and new orders.

The business activity index slid to 54.5 in January from 58.0 in December, while the new orders index fell to 51.3 in January from 54.4 in December.

"Poor weather conditions were highlighted by many respondents as impacting business levels and production," said Steve Miller, Chair of the ISM Services Business Survey Committee.

He added, "Like last month, many panelists also mentioned preparations or concerns related to potential U.S. government tariff actions; however, there was little mention of current business impacts as a result."

Meanwhile, the report said the employment index crept up to 52.3 in January from 51.3 in December, indicating a modest acceleration in the pace of job growth in the service sector.

The ISM also said the prices index slumped to 60.4 in January from 64.4 in December, suggesting a slowdown in the pace of price growth.

On Monday, the ISM released a separate report showing U.S. manufacturing activity expanded in January following 26 consecutive months of contraction.

The ISM said its manufacturing PMI rose to 50.9 in January from 49.2 in December, with a reading above 50 indicating growth. Economists had expected the index to inch up to 49.8.