WASHINGTON - Service industries expanded more than forecast in January as the biggest part of the U.S. economy overcame the effects of snow and freezing temperatures to boost hiring by the most in more than three years.
The Institute for Supply Management’s non-manufacturing index increased to 54 from 53 in December, the Tempe, Ariz.-based group said Wednesday. Readings greater than 50 signal expansion. The group’s employment gauge was the strongest since November 2010, even as a separate report showed company payrolls grew less than projected.
The pickup in services contrasts with the group’s manufacturing report this week that indicated factories expanded at a slower pace as colder-than-usual weather slowed demand and production. Retailers, management companies and professional services such as accountants were among areas that improved last month, showing the recovery is on firmer footing going into 2014 as households reduce debt burdens and wealth improves.
“This suggests ongoing momentum,” said Samuel Coffin, an economist at UBS Securities LLC in Stamford, Conn., and the top forecaster for the ISM services index in data compiled by Bloomberg going back two years. The divergence with the manufacturing figures shows there “is not a fundamental softening in activity.”
Companies added 175,000 workers to payrolls last month after a revised 227,000 rise in December, according to data issued today from the ADP Research Institute in Roseland, N.J. The median projection of 40 economists surveyed by Bloomberg called for an advance of 185,000.
Stocks fell after the reports. The Standard & Poor’s 500 Index dropped 0.2 percent to 1,752.43 at 12:03 p.m. in New York.
Weather was an issue in other parts of the world. Services in the United Kingdom grew in January at the slowest pace in seven months as new business cooled and wet weather soaked the country, another report today showed. Services in the euro area expanded at a slower pace than initially estimated and retail sales slid, according to other figures, underlining the fragility of the region’s recovery.
Join PBN for the best networking event and party of the winter - January 15, 2015 - the Book of Lists Party at the Providence Public Library. Reserve your spot by December 31st and get a holiday gift from PBN!
PBN's annual Book of Lists has been an essential resource for the local business community for almost 30 years. The Book of Lists features a wealth of company rankings from a variety of fields and industries, including banking, health care, real estate, law, hospitality, education, not-for-profits, technology and many more.