U.S. Services Sector Gathers Pace

Feb. 5, 2007
ISM index rose to 59%.

The vast services sector of the U.S. economy gathered steam in January, a survey by the Institute of Supply Management showed Feb. 5. The ISM said its index of non-manufacturing activity rose to 59% from 56.7% in December, in the latest signal of an economy that is accelerating.

The figure was better than the average Wall Street forecast of 57% and well ahead of the 50 % that is the dividing line between expansion and contraction.

"The overall indication in January is continued economic growth in the non-manufacturing sector at a faster pace than in December," said ISM survey chief Anthony Nieves, noting that it was the 46th consecutive month of expansion for the sector.

The components of the overall index showed generally strong growth, with a contraction in inventories. Some analysts argue that lower inventories imply that companies have underestimated demand and economic activity.

The inventory index fell to 47% from 53.5% a month earlier.

The prices index, a gauge of inflation pressures, fell 4.5 points to 55.2%.

The index for new orders slipped to 55.4% from 55.6% a month earlier, while the employment index dipped to 51.7% from 53.3%.

The report was in contrast to the latest ISM survey on manufacturing, which showed that national industrial activity fell to 49.3% from 51.4 % in December.

Copyright Agence France-Presse, 2007

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