A measurement of the services side of the economy rose to its highest level since well before the pandemic in January, another indication that the economy is poised for a recovery.
The Institute for Supply Management said on Wednesday that its nonmanufacturing purchasing managers’ index came in at 58.7 for the month, up from December’s revised figure of 57.7. A reading above 50 suggests expansion.
New orders were robust, indicating a more positive intermediate-term outlook by firms anticipating an acceleration of economic activity this spring and summer, and the employment subindex indicates that employment data will be strong for the month as well.
As more people avoided public places last year because of pandemic-related restrictions and fears, consumer spending shifted away from services to goods. The January ISM data suggests that firms anticipate consumers are eager to spend more time outside of their homes.
According to the Opportunity Insights Economic Tracker, total time spent outside of the home showed a steady increase last spring, as coronavirus case numbers declined and the weather improved. A similar trend is likely to follow in the coming months, and will be welcomed throughout the service sector and the entire consumer ecosystem.
For more information on how the coronavirus pandemic is affecting midsize businesses, please visit the RSM Coronavirus Resource Center.