US services, including data center buildings, continues to carry the economy
The January ISM services index was unchanged m/o/m at 53.8, though a touch above the estimate of 53.5 (December was revised from 54.4). The business activity component lifted to 57.4 from 55.2 and 3 pts above the 6 month average.
New orders slipped 3.4 pts but after rising by 3.7 pts last month. Backlogs are still below 50 at 44, exactly where the half yr average is at. Inventories took a big dive, down 9.1 pts to 45.1. Employment was down 1.4 pts to 50.3, though holding above 50 for a 2nd month after a string of below 50 prints. That said, just 5 of 18 industries added new workers. Supplier deliveries reflect longer lead times. Finally, prices paid rose 1.5 pts m/o/m to 66.6, remaining well above 50. There are now 17 industries paying higher prices of 18 asked up from 15 in December.
Industry breadth remained the same with 11 of 18 sectors reporting growth and 5 seeing a contraction.
ISM said this of note, “There was more respondent commentary in January on tariff impacts and uncertainty, potentially the result of annual contract renewals and geopolitical tensions. Gasoline and diesel fuel continued to be cited as commodities down in price. With the highest Business Activity and Supplier Deliveries index readings since October 2024, indicating higher business activity levels and slower supplier deliveries, whether pricing increases will stick or expand needs to be closely watched.”
The comments below were mixed.
