Activity in the services sector grew at a slightly stronger pace in January than in December, amid the first expansion in employment in nearly two years, the Institute for Supply Management said Wednesday.
The group reported that its non-manufacturing index rose to 54.5 in January from a downwardly revised 54.2 in December. Index readings above 50 indicate expansion and those below 50 signal contraction.
It was the 12th straight month that the index has shown growth, and the January figure was just a shade below the 54.6 reading forecast by economists. The index tracks services ranging from tourism and legal help to banking and entertainment. The sector accounts for about 80 percent of the economy.
“This is certainly good news,” said Ralph Kauffman, chairman of the institute’s survey committee. The reading “indicates at least to some extent we may be seeing the end of the tunnel.”
Employment activity in the sector grew for the first time since February 2001 and topped a reading of 50 for the first time since January 2001. The services employment index was 50.3 for January, up from 46.9 in December.
“It’s too early to declare victory in the employment area,” said Kauffman.
Economists warned that the services employment index has a poor correlation with government data, but said it still provided some hope the economy’s improvement may finally be generating new jobs.
