Service Industries in U.S. Expand by Most in Nearly Two Years

Growth at U.S. service providers unexpectedly accelerated in January to an almost two-year high as a pickup in orders encouraged a rebound in hiring.

The Institute for Supply Management’s services index rose to 58.7 during the month from 57.7 in December, according to data released Wednesday. The median estimate in a Bloomberg survey of economists called for a decline to 56.7.

Service-industry employment, which includes leisure and hospitality, expanded by the most in 11 months. Some cities, including New York, are easing restrictions on dining and other activities, which may help fuel more consumer spending.

Service Industries in U.S. Expand by Most in Nearly Two Years

The economy may also get a boost from the vaccine roll out while lawmakers in Washington debate another round of stimulus.

“Respondents’ comments are more optimistic about business conditions and the economy,” Anthony Nieves, chair of the ISM’s Services Business Survey Committee, said in a statement. “Various local- and state-level Covid-19 restrictions continue to negatively impact companies and industries.”

Fourteen service industries reported growth during the month, led by real estate, rental and leasing, construction and wholesale trade.

The data follow the group’s report on Monday that showed manufacturing remained robust last month even as supply chain disruptions restrained production.

The ISM’s index of new orders at service companies rose to 61.8 in January, the strongest since July. Backlogs also picked up last month.

A gauge of export demand, however, contracted at the fastest pace since May. At the same time imports rose, as companies attempt to replenish lean inventories.

©2021 Bloomberg L.P.

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