The U.S. services sector expanded at a quicker pace in January as the non-manufacturing business activity composite index was 56.8, compared to 53.0 in December, on a seasonally adjusted basis, the Institute for Supply Management reported Friday.

Economists had expected a 53.0 level.

An index reading below 50 signals a slowing economy, while a level above 50 suggests expansion. The prices paid index, closely watched for signs of inflation, gained to 63.5 from 62.0. The employment index increased to 57.4 from 49.8.

The business activity production index rose to 59.5 from 55.9, the new orders index increased to 59.4 from 54.6, the backlog of orders grew to 49.5 from 45.5, new export orders rose to 56.5 from 51.0, inventories slid to 47.0 from 48.5, inventory sentiment declined to 58.5 from 59.5, the supplier deliveries index dipped to 51.0 from 51.5, and imports increased to 55.0 from 54.0.

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