S&P global
S&P global services PMI index final
  • Preliminary services PMI 52.9 versus 51.4 last month
  • Composite PMI prior 50.9 (preliminary 52.3)
  • Services PMI final 52.5 versus 52.9 preliminary and 50.9 last month
  • Composite PMI Final 52.0 versus 52.3 preliminary and 51.4 last month

Highligts from S&P Global:

  • The US services economy experienced strong growth at the start of the year, marking the fastest expansion in business activity since June 2023.
  • New orders increased at a quicker pace, with both domestic and new export orders rising significantly, the latter at the fastest rate since August 2023.
  • Optimism among firms regarding future output improved, alongside an expansion in staffing numbers due to increased work pressure and rising backlogs for the first time in seven months.
  • Inflationary pressures eased, with services providers raising output charges at the slowest pace since June 2020, reflecting slower growth in input costs.
  • The final S&P Global US Services PMI Business Activity Index for January was 52.5, indicating a modest expansion and the fastest growth rate since June 2023.
  • Services firms reported a third consecutive month of new business growth, attributed to effective advertising and increased customer activity.
  • New business from abroad grew marginally but at the fastest pace since August 2023, driven by stronger demand in key export markets.
  • Despite stronger new business growth, service providers aimed to price competitively, leading to the slowest rate of charge inflation since June 2020.
  • Input costs continued to rise due to higher supplier, fuel, and transportation costs, as well as increased wages, though the pace of cost inflation slowed from December.
  • Business confidence among US services firms increased, with output expectations for the year ahead reaching the highest level since June 2023.
  • Firms expanded their staffing in response to a renewed increase in backlogs of work, although the rate of job creation eased compared to December.

Comments from Chiris Williamson, Chief Business Economist

"The US service sector started the year in a sweet spot, with output and demand growth accelerating while price pressures cooled markedly. The key driver of faster growth was the financial services sector, where looser financial conditions tied to expectations of lower interest rates spurred greater activity in January. Households are also benefitting from loosened financial conditions, driving renewed growth in consumer-facing services.
"The buoyancy of the service sector has outweighed a further lackluster performance in manufacturing, and is driving overall output higher at a rate broadly consistent with GDP rising at a 2% pace. With bad weather having curbed some economic activity in January, February should see some further improvement in overall performance.
"Business optimism about growth prospects in the service sector has likewise jumped higher, encouraging further payroll growth, albeit the latter limited by labor shortages. "Price pressures have meanwhile shifted lower. Overall service sector input cost growth is now running at the second-lowest for over three years, helping pull selling price growth across goods and services down to a level consistent with inflation dropping materially below the Federal Reserve's 2% target in the near future."