The data released by the United States on Friday (3rd) showed that the ISM non-manufacturing index rose sharply from the shrinking range of 49.6 in December last year to 55.2 in January, returning to above the 50 line of expansion and contraction, far exceeding market expectations of 50.3, the highest level in mid-2020. The largest monthly increase since then, symbolizing the recovery of consumer demand. In addition, the growth of new orders and the continued modest rise in raw material prices have brought a glimmer of hope to the US economy, which may experience a recession this year.
In January, the US ISM non-manufacturing index details: Business activity production index reported 60.4, previous value 53.5 New orders index reported 60.4, previous value 45.2 Employment index reported 50.0, previous value 49.4 Supplier delivery index reported 50.0, previous value 48.5 Inventory The index was at 49.2, the previous value was 45.1 The raw material price index was at 67.8, the previous value was 68.1 The unfinished order index was at 52.9, the previous value was 51.5 The new export order index was at 59.0, the previous value was 47.7 The raw material import index was at 53.0, the previous value was 52.7 The inventory prosperity index Reported at 55.8, the previous value was 55.9
It is worth noting that the strong rebound of the ISM non-manufacturing index this time is based on the unexpected plunge last month, which fell into contraction. At the same time, the final value of the Purchasing Managers Index (PMI) of the service industry in January announced on the same day has shrunk for 7 consecutive months, which is a contradictory signal in stark contrast to the ISM data. The final value of the U.S. service industry PMI in January was 46.8, expected 46.6, and the previous value was 44.7. In addition, the final composite PMI in the United States rose to 46.8 from the initial value of 45 in January, higher than the market’s expected 46.6, but it still shrank for 7 consecutive months.
Looking at the sub-items of the index, the business activity production index rose 6.9 points from 53.5 in December last year to 60.4, the second highest in a year. The new orders index reported 60.4, a surge of 15.2 points from 45.2 in December last year, reaching a new high since early 2022.
The employment index edged up to 50 from 49.4 in December, indicating little change in the number of workers. Earlier in the day, the US non-farm payrolls report for January showed that private enterprise service providers added nearly 400,000 employees in January.
The raw materials price index edged down 0.3 point to 67.8, a two-year low, from 68.1 in December, but the data still suggested that costs were rising. New export orders rebounded sharply by 11.3 points to 59 from 47.7 in December, suggesting a rebound in overseas demand, likely due to China’s economic recovery.
Business activity in the U.S. services economy contracted in January as companies reported a further deterioration in new business inflows, said Chris Williamson, chief economist at S&P Global. Hiring has all but ground to a halt as companies reassess their hiring needs in light of the weak demand environment.
Williamson also said the January survey sent mixed messages about inflation. While rising wage pressures pushed up some costs, reflecting a tight labor market, fierce competition again limited the ability to pass on higher costs to customers in the form of higher prices. In addition, coupled with the decline in manufacturing production this month, the downturn in the service industry at the beginning of the year has increased the risk that the US economy will shrink in the first quarter.