US Service Economy Expands at Fastest Pace since September: Markit
The US service economy expanded at the fastest pace since September, as business activity in the world’s largest economy remained resilient amid colder than average temperatures.
Markit Group’s gauge of US service activity rose from 55.7 to 56.6 in January. A median estimate of economists polled by Thomson Reuters called for 56.2. A reading above 50.0 signifies expansion in the non-manufacturing sectors, whereas a reading below that threshold signifies contraction.
Service activity remained elevated in January, driven largely by business expansion and growing confidence across the US economy. Business expectations for the next 12 months reached the highest level in three years, as service providers continued to benefit from the broader recovery.
Backlogs of work declined for the first time since November, as employers increased staffing numbers to meet ongoing demand. Although job creation was less robust than the previous month, the index measuring employment has been positive since March 2010.
“US service providers reported a busy January, providing an important signal that that the economy remains in good health at the start of the year,” said Chris Williamson, chief economist at Markit. “Growth of business activity picked up from the already-robust pace seen in December, and optimism about prospects for the year ahead rose to one of the highest levels we’ve seen since the financial crisis.”
Combined with last week’s manufacturing PMI, services data suggest the US economy added around 200,000 jobs this month. If the PMI figures are any indication, the US economy expanded 3.5 percent in the final three months of 2013. The Commerce Department is set to release official GDP figures Thursday.
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