ISM Signals Steady US Services Growth as Inflation Pressures Rebuild

The latest ISM data showed the US services sector holding firm in January, with activity remaining comfortably in expansion territory. The unchanged headline reading underscored the sector’s resilience and suggested that the backbone of the US economy continues to grow at a steady pace.

Prices Rise Under the Surface

Beneath the stable headline figure, the ISM survey revealed renewed upward pressure on costs. The index tracking prices paid by businesses moved higher, signaling that inflationary pressures in the services sector remain persistent despite broader disinflation trends.


Employment Growth Loses Momentum

The ISM employment component edged lower, pointing to a moderation in hiring activity. While labor conditions remain broadly stable, the data suggest companies are taking a more cautious approach to staffing amid an uncertain economic outlook.


New Orders Cool

Demand indicators softened, with new orders declining from the previous month. The pullback hints at a slower pace of incoming business, potentially setting the stage for more measured growth in the months ahead.
Markets Balance Growth and Inflation Risks
Financial markets digested the ISM report by keeping the US dollar modestly supported, as investors weighed steady economic activity against lingering inflation risks. The data reinforced the delicate balance facing markets as they assess the path forward for growth and policy.