The seasonally adjusted Markit Flash U.S. Services PMI™ Business Activity Index – which is based on approximately 85% of usual monthly replies – posted 54.0 in January, up from 53.3 in December and above the neutral 50.0 threshold for the fifteenth successive month. January’s index reading signalled a solid rate of output growth across the U.S. service sector, albeit still weaker than the average since the survey began in late-2009 (55.8).
Service providers linked rising activity levels to greater business and consumer spending in January. However, the overall rate of new business growth across the service economy continued to moderate at the start of 2015. Moreover, latest data signalled the weakest upturn in new work since the survey began in October 2009.
Despite a further slowdown in new business growth, service providers continued to boost their payroll numbers during January. That said, the rate of job creation eased fractionally since December and was the least marked for nine months. Meanwhile, backlogs of work rose at the weakest rate in the current six-month period of expansion.
Service providers remain upbeat about their growth prospects over the course of 2015, with the balance of firms forecasting an increase in business activity over the next 12 months picking up since December. Moreover, the overall degree of positive sentiment was only marginally below the survey average.
January data signalled that U.S. service sector input prices were close to stabilisation, with the rate of cost inflation only fractional and the joint-slowest since the survey began over five years ago. Meanwhile, average prices charged by service providers also rose only slightly in January, and the latest increase was the weakest for six months.
At 54.2 in January, up from 53.5 in December, the seasonally adjusted Markit Flash U.S. Composite PMI Output Index signalled a robust expansion of private sector business activity. Although the index picked up since December, the latest reading was the second-weakest for 11 months and below the series average (55.8).
January data also pointed to the slowest increase in new orders received by U.S. private sector firms in more than five years of data collection.