Preview: Due February 5 - U.S. January ISM Services - Employment to rebound from December weakness
We expect January’s ISM services index to increase to 52.0 from December’s weaker index of 50.5, which was revised from its original release of 50.6. This will keep the picture subdued but positive.
The S and P services index saw a fourth straight improvement in January reaching a 7-month high of 52.9 but is not a reliable guide to ISM data. S and P data appears more sensitive to bond yields. Most regional service sector surveys remained quite subdued, though were on balance a little improved from December.
The main source of improvement is likely to be a rebound in employment from a very weak December outcome of 43.8, though at 49.0 we do not expect the index to quite return to the marginally positive picture seen through most of 2023. Non-farm payroll data implies upside risk. We do not expect much change in the other three components of the composite, business activity, new orders and deliveries. Prices paid do not contribute to the composite. We expect a modest slowing to 55.0 from 56.7.
