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Economy in Brief

U.S. ISM Services Index Continues Lower in January
by Tom Moeller  February 3, 2022

• Component declines are widespread.

• Price index weakens.

• Composite factory & services series declines.

The ISM Index of Services Activity weakened significantly during January to 59.9 from 62.3 in December, revised from 62.0. Earlier figures also were revised. The series peaked at 68.4 in November. The Action Economics Forecast Survey expected 60.0 for January. Haver Analytics constructs a composite index combining the services index and the manufacturing reading released on Tuesday. This index fell to 59.6 in January from 61.9 in December. These series date back to July 1997.

In the latest services survey, the business activity reading weakened to 59.9 from 68.3 in December. It was the lowest point since May 2020. The new orders index also fell to 61.7 from 62.1 in December. A greatly lessened 27.9% (NSA) of respondents reported more orders while a reduced 13.5% reported a decline. The employment measure fell to 52.3, the lowest level since June 2021. A greatly reduced 18.5% of respondents indicated higher employment and a moderately reduced 18.5% reported it lower. The percentage indicating that employment held steady rose sharply to 63.0% of respondents. The supplier delivery index (NSA) rose to 65.7 last month after falling sharply to 63.9 in December from 75.7 in November. A greatly increased 4.6% of respondents reported faster delivery speeds while a fairly steady 36.1% reported slower speeds.

The prices index eased to 82.3 after improving to a record 83.9 in December. An increased 63.1% (NSA) of respondents reported price increases versus 57.4% in December, while 1.7% reported price declines. A lessened 35.2% reported stable prices.

The export orders series fell sharply to 45.9, its lowest point since May 2020. The imports index weakened to 51.1 in January and reversed most of its December increase to 55.5. The order backlog measure plummeted to 57.4, a nine-month low, while the inventory change index rose sharply to 47.5 from 38.3. These series are not seasonally adjusted and are not included in the nonmanufacturing composite total.

3,2,1...Liftoff. What Does "Liftoff" Really Mean in Fed Policy? from the Federal Reserve Bank of St. Louis is available here.

The ISM figures are available in Haver's USECON database, with additional detail in the SURVEYS database. The expectations figure from Action Economics is in the AS1REPNA database.

ISM Services Survey (SA) Jan Dec Nov  Jan '21 2021 2020 2019
Services PMI 59.9 62.3 68.4 58.5 62.5 54.3 55.5
   Business Activity 59.9 68.3 72.5 60.2 64.6 55.9 58.0
   New Orders 61.7 62.1 68.3 61.0 63.4 55.6 57.6
   Employment 52.3 54.7 57.0 55.2 54.4 46.1 55.0
   Supplier Deliveries (NSA) 65.7 63.9 75.7 57.8 67.5 59.7 51.5
Prices Index 82.3 83.9 83.0 64.7 77.5 58.7 57.5
ISM Mfg. & Services (Haver Composite) 59.6 61.9 67.5 58.6 62.3 54.1 55.1
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