WASHINGTON – The U.S. services sector boomed in January, registering the best performance since 2005 and delivering more evidence of American economic strength.
The Institute for Supply Management, a trade group of purchasing managers, said Monday that its services index hit 59.9 last month, up from 56 in December and the highest since it reached 61.3 in August 2005. Anything above 50 signals that the sector is expanding. The services sector is now on a 96-month winning streak.
Production, new orders, hiring and new export orders all grew faster in January.
Fifteen services industries reported growth in January, led by management firms and entertainment companies. Just three contracted, led by information companies.
Private services companies dominate the U.S. economy, accounting for 71 percent of American jobs.
Anthony Nieves, chair of the ISM's services index committee, said the strong January performance reflects improving business and consumer confidence and a strengthening global economy. A massive tax-cut bill that became law in December may also be helping.
"The tax changes have definitely promoted some activity (in) new orders," Nieves said.
The U.S. economy is looking healthy. The Labor Department reported Friday that employers added 200,000 jobs in January and that wages grew at the fastest pace in eight years. Unemployment remains at a 17-year low 4.1 percent.