WASHINGTON – U.S. service companies expanded at a slightly faster pace in January. New orders, sales and hiring showed strength in a sign that financial firms, retailers and information technology companies foresee stronger growth.
The Institute for Supply Management, a trade group of purchasing managers, said Wednesday that its service-sector index rose to 54 from 53 in December. Any reading above 50 indicates expansion.
The improvement points to continued economic gains for the service industry, despite some challenges posed by freezing temperatures and winter storms last month.
The survey covers businesses that employ 90 percent of the U.S. workforce, including retail, construction, health care and financial services firms. Because these companies are less sensitive to nasty weather than manufacturers are, the January figure suggests that a reported slowdown at factories last month was due in part to the winter chill rather than to broader weakness in the economy.
The services sector has experienced slow, incremental growth for the past four years and is on a sustainable path, said Anthony Nieves, chairman of ISMs services survey.
Its been chugging along very steady, said Nieves, adding that the 4 1/2 -year-old recovery from the recent recession has been very resilient even with the ups and downs.
A measure of new orders rose 0.5 points to 50.9. The measure for hiring rose 0.8 points to 56.4, the highest reading since November 2010.
The improved employment measure could point to solid jobs gains in the January employment report the Labor Department will release Friday, said Maninder Sibia, an economist for Contingent Macro Advisors.