Economic activity in the services sector grew in January for the eighth month in a row, according to the latest Services ISM Report on Business from the Institute for Supply Management.

“The Services PMI registered 58.7%, one percentage point higher than the seasonally adjusted December reading of 57.7%. This reading is the highest since February 2019 (58.8%) and indicates the eighth straight month of growth for the services sector, which has expanded for all but two of the last 132 months,” Anthony Nieves, CPSM, CPM, APP, CFPM, chair of the Institute for Supply Management services business survey committee, said. “The Supplier Deliveries Index registered 57.8%, down five percentage points from December’s reading of 62.8%. (Supplier Deliveries is the only ISM Report on Business index that is inversed; a reading of above 50% indicates slower deliveries, which is typical as the economy improves and customer demand increases.)

“The Prices Index figure of 64.2% is 0.2 percentage point lower than the seasonally adjusted December reading of 64.4%, indicating that prices increased in January, and at a slower rate. According to the Services PMI, 14 services industries reported growth. The composite index indicated growth for the eighth consecutive month after a two-month contraction in April and May. There was continued growth in the services sector for the month of January. Respondents’ comments are more optimistic about business conditions and the economy. Various local- and state-level COVID-19 restrictions continue to negatively impact companies and industries. Production capacity and logistics issues continue to cause supply chain challenges.”

Construction, finance and insurance, and agriculture were among the 14 service industries that reported growth in January. Arts, entertainment and recreation; education services; retail trade; and utilities were the four industries that reported contraction in January.

What Respondents Are Saying

• “Many of our restaurant locations remain completely shut down to on-site dining. We remain optimistic about business trends beyond April/May 2021. [We] have a very challenging few months to go.” (Accommodation and Food Services)
• “Orders for new business have picked up. Labor is still the major impediment to the business.” (Construction)
• “Seasonal reduction of activity due to winter break from campus activity.” (Educational Services)
• “Start of 2021 on track with a positive outlook.” (Finance and Insurance)
• “Increased number of COVID-19 patients has forced the cancellation of elective surgeries. Bed capacity limited.” (Health Care and Social Assistance)
• “The copper shortage is slowing deliveries of key network equipment.” (Information)
• “Still working under COVID-19 restrictions and uncertain political climate.” (Mining)
• “Overall, everything continues to be more optimistic; however, we are still seeing impacts from suppliers that are being affected by limiting staff due to COVID-19 restrictions.” (Other Services)
• “Post-holidays spending is up. Many capital projects and expenditures are coming to fruition.” (Public Administration)
• “Business outlook for 2021 looks better. Companies are optimistic that conditions will start improving by the end of the second quarter.” (Retail Trade)
• “Business outlook for 2021 is positive, with projects and capital investments moving forward. Target financial objectives have been obtained.” (Utilities)
• “Good start to the year; business has promising growth. Market conditions are still affected by logistics issues, both domestic and international. Also, prices for raw material prices and freight are increasing, up by 4% to 13%.” (Wholesale Trade)