S&P Global Services PMI: Growth Accelerates to 7-Month High

The January U.S. services purchasing managers' index (PMI) conducted by S&P Global came in at 52.5, just below the 52.9 forecast. The latest reading keeps the index in expansion territory for the 12th straight month and is the highest level for the index in the past seven months.

From the latest press release, Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, said:

"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."

Here is a snapshot of the series since mid-2012.

S&P Global Services PMI