The U.S. services sector expanded at a slower pace in January as the non-manufacturing business activity composite index was 53.5 in the month, compared to 55.8 in December, on a seasonally adjusted basis, the Institute for Supply Management reported Wednesday.
An index reading below 50 signals a slowing economy, while a level above 50 suggests expansion.
Economists polled by Thomson Reuters had expected a 55.1 level.
The prices paid index decreased to 46.4 from 51.0.
The employment index fell to 52.1 from 56.3.
The business activity/production index slid to 53.9 from 59.5, the new orders index was at 56.5, down from 58.9; backlog of orders grew to 52.0 from 50.0; new export orders decreased to 45.5 from 53.5; inventories declined to 51.5 from 53.0; inventory sentiment dropped to 61.5 from 64.5; the supplier deliveries index climbed to 51.5 from 48.5; and imports decreased to 46.0 from 49.0.
Members' general comments on business in the month included:
- "We have experienced a slight increase in business activity since the start of the new year. Our new job orders have increased about 10 percent and the job awards about 12 percent." (Professional, Scientific & Technical Services)
- "Healthcare requirements in several states changing, which will [affect] our business directly." (Health Care & Social Assistance)
- "Research funding expected to increase during 2016 and will result in higher employment when compared to calendar year 2015." (Educational Services)
- "Protein commodities all lower due to strong U.S. dollar. Trade imbalance in exports and embargos with certain foreign nations." (Accommodation & Food Services)
- "Sales have improved. We are feeling more optimism, but remain concerned about the impact of global unrest." (Retail Trade)
- "Watching economic slowing in other sectors, but not affected yet." (Management of Companies & Support Services)
- "We continue to see record low key commodity prices driving product cost down. Record low oil prices are putting extreme pressure on exchange rates for key export markets Canada and Mexico. Falling prices [are] pushing margins down as many are forced to drop prices to meet the competition. Extreme weather conditions this season are adding additional challenge[s] to both retail and wholesale sales volume regionally." (Wholesale Trade)
