The US economy likely picked up in January as survey data suggested services sector activity reached its highest level in over 12 years.
The Institute for Supply Management’s (ISM) non-manufacturing PMI jumped to 59.9 in January compared to 56 in December.
It points to a blistering pace of expansion in the US services sector.
New orders surge
The survey found new orders in services surged by 8.2 points to 62.7, the highest reading since early 2011.
Meanwhile, the production index increased by 2 points and services sector employment jumped by 5.3 points.
James Knightley, chief international economist at ING claimed the survey indicated the US economy was in “fantastic shape”, with recent cuts in the corporate tax rate and the possibility of increased spending on infrastructure likely to boost activity yet further.
"The non-manufacturing sector reflected strong growth in January after two consecutive months of pullback. Overall, the majority of respondents’ comments are positive about business conditions and the economy. They also indicated that recent tax changes have had a positive impact on their respective businesses,” commented ISM.
US economic growth slowed to 2.6% in the fourth quarter of 2017, versus 3.2% in the prior quarter.
However, data thus far in 2018 suggests we should expect an acceleration in growth in the current quarter.
Official data released on Friday showed payrolls grew by 200,000 in January, beating economists´ expectations.
The figures also indicated US wages were growing at their strongest pace in over eight years.