U.S. ISM nonmanufacturing index rises to highest in over one decade in January

The U.S. ISM nonmanufacturing index started 2018 on a strong footing. The index rose in January to 59.9 from December’s 56. This is the highest in over a decade. New orders and employment drove the rebound, while other subcomponents saw a smaller rise.

New orders index was up 8.2 points to 62.7, amidst a modest rise in new export orders. This shows that domestic demand conditions were robust. The employment index rose strongly and is in line with the robust private sector services employment recorded in the January employment report released last week.

The business activity index was up 2 points and firms recorded a drawdown of inventories in January. Supplier deliveries and backlog of orders continued to be greatly unchanged from December. Overall, the January report reflects strong confidence in the services sector, and augurs well for services sector activity in the months ahead.

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