U.S. Services Sectors Continues Recovery, While European Slows Down in January
Feb 6, 2003
The US Non-manufacturing sector reported a slightly faster rate of expansion than in December after the ISM index of business activity reached 54.5%. That is, 4.5 points above the breakeven 50% threshold. New Orders, including export Orders and Imports both increased, while employment grew slightly for the first time in 23 months. Meanwhile, the NTC-Reuters EUROZONE Index of Service Sector Business Activity Index fell from 50,6% in December to 50,2% in January, confirming a near stagnation of business activity. Eurozone service sector employment fell at the fastest rate seen in the surveys history (four and half years), 45,6% in January and the six month in a row of employment decline. Only Spain had sector employment growth but it was a marginal. The services sector in the UK also exhibited a slower growth pace after the Seasonally adjusted January Business Activity Index fell from 53,2% in December to 52,3% in January. This is not only its lowest level since February 2002, but also part of a decreasing trend that started in November.
U.S. services sector is still far from a full recovery. Only 24 percent of members reported an increase in business activity, compared to December's 27 percent. Reduced activity was reported by 25 percent of members compared to 24 percent in December. The remaining 51 percent of members indicated no change in business activity, compared to 49 percent in December. Supplier Deliveries indicated slower performance for the 17th consecutive month and Clients continued to delay capital-spending decisions.
Industries reporting the highest rates of growth of new orders in January were the public administration, entertainment services, construction, Finance and Banking, and Health Services. Among the services the experienced the highest rates of contraction were utilities, retail trade, and transportation.
ISM's Non-Manufacturing Employment Index for January was 50.3 percent compared to 46.9 percent in December. The industries reporting growth in employment in January were wholesale trade, communications, and finance and banking. Industries reporting reduction in employment in January were construction, utilities, the public administration, transportation, and retail trade.
The industries reporting the highest rates of increase in prices paid in January were legal services, insurance, and transportation.
On the European side, Germany significantly under-performed other Euro-economies and hit a new five and half year low record, while Italy, France and Spain recoded growth in the sector. Also Incoming New Business Index signaled a marginal contraction while Italy exhibited a strong demand for services.
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