#United States #Economic Growth #Tempe #ISM Report #Services PMI

Economic Activity in Services Sector Continues to Rise in January 2025

Economic activity within the services sector saw consistent growth for the seventh month in a row as of January 2025, according to the latest ISM® Report On Business®. The Services PMI® recorded a solid 52.8%, affirming ongoing expansion as the economy continues to recover from the challenges posed by the pandemic.

Key Indicators

The January report indicated that several significant indexes reflected economic health:

• - Business Activity Index: 54.5%, slightly down from December's robust 58%.
• - New Orders Index: 51.3%, indicating ongoing demand but a decrease from December's 54.4%.
• - Employment Index: 52.3%, suggesting a stable job market, up from last month's 51.3%.
• - Supplier Deliveries Index: 53%, pointing to slower delivery times as demand increases due to economic expansion.
• - Prices Index: Registered at 60.4%, a modest decrease, indicating that costs in the services sector still pose inflationary pressures.

Month-over-Month Changes

Despite signs of slowing growth, January 2025 demonstrated the resilience of the services sector. The Services PMI's decrease of 1.2 percentage points compared to December's adjusted reading reflects general adjustments in business activity. Nonetheless, with 14 industries reporting growth, it’s clear that the sector remains robust overall.

Industry Performance

Among the industries showing growth in January are:

• - Accommodation & Food Services
• - Mining
• - Finance & Insurance
• - Healthcare & Social Assistance
• - Transportation & Warehousing

Interestingly, the report noted that the Real Estate and Rental Leasing industries experienced contraction, hinting at sector-specific challenges that could influence overall market dynamics.

Respondents' Insights

Business leaders voiced a mix of optimism and caution in their comments:

• - “We anticipate substantial projects in the energy sector to commence by Q2.”
• - “Prices from suppliers for 2025 are on the rise, necessitating adjustments in our budgeting.”

Observations about persistent apprehension regarding potential tariffs also surfaced, indicating that economic and political factors could complicate recovery efforts going forward.

Conclusion

The services sector continues to expand, albeit at a slower pace, as illustrated by the readings from January's ISM Report. The slight downturn signals a need for strategic adjustments among businesses to sustain momentum. Nevertheless, the general outlook remains positive as the sector adapts to evolving market conditions, with demand sustained across various industries despite rising costs and external uncertainties. Looking ahead, the next report is set to unveil further insights into this ongoing economic narrative.