ISM PMI suggests U.S. is withstanding global economic headwinds
The U.S. service sector expanded at a slower pace in January, suggesting the domestic economy remains stable despite increasing headwinds from abroad.
The Institute for Supply Management said its gauge of nonmanufacturing activity fell to 53.5 in January, the lowest reading since February 2014. The reading stood at 55.8 in December.
Economists surveyed by The Wall Street Journal had expected the index to register at 55 in January.
Manufacturing activity has tumbled amid weak global demand, a strong dollar and low oil prices. The service sector, meanwhile, has been aided by strong job growth and accelerating wages, as Americans spend more of their money on services such as rent and health care rather than goods.
The service sector represents between 80% and 90% of the economy.
The effect of low oil and gas prices on the mining sector dragged down the overall service index for much of the past year, but that was outweighed by growth in other sectors, including construction, health care and finance.
Employment growth, business activity and new orders in the service sector all slowed last month, but supplier deliveries were up after plunging in December. Overall, Mr. Nieves said the numbers are strong enough to suggest the sector is still growing.
