The US services sector expanded at a record pace in January, springing to life after slowing for two straight months, according to a business survey released Monday.
The record growth represented the 96th month of uninterrupted expansion and was driven higher by surging new orders and rising employment, but also saw prices tick higher, according to the Institute for Supply Management.
ISM’s monthly non-manufacturing index jumped 3.9 points to 59.9 percent, seasonally adjusted, the highest since the survey began in 2008.
The result far outshot a consensus analyst forecast, which called for the index to rise just slightly to 56.7 percent. Any reading above 50 percent indicates growth.
Anthony Nieves, chair of ISM’s non-manufacturing survey committee, told reporters that a pickup in growth in the services sector more typically comes in February.
“Indications are that this is probably a month sooner than what we see going into a new year,” he said in a conference call.
“The heart of the economy has come out really strong for the month of January,” due to the confidence within companies in the key sector.
The orders index jumped 8.2 points to 62.7 percent while the employment index rose 5.3 points to 61.6 percent.
Capital sending and exports are rising sector-wide, with industries benefitting from synchronized growth in major economies around the world, Nieves said.
The prices index gained two points to reach 59.9 percent on rising costs for fuel, transportation, metals, copper and steel, he said.
Analysts say 2018 may be the year inflation finally rises above central bank targets.
Of the 18 services industries surveyed, 15 reported growth for the month, including arts and entertainment, retail, health care, mining, construction and finance. Three reported contraction.
“Overall, sales velocity looks strong. Some regional differences due to weather conditions, but overall, a strong month,” said one survey respondent in the wholesale trade industry. afp