The Institute for Supply Management (ISM) Services Index declined from 54 to 52.8 in January, still indicating expansion (above 50), just at a lesser pace. Fourteen service industry categories expanded last month, while three contracted. Among the weaker three were real estate, and rental and leasing.

• The business activity index slipped from 58 to a five-month low of 54.5. Comments from purchasing managers suggested inclement weather had impacted activity.
• The forward-looking new orders index dropped from 54.4 to 51.3, the lowest level since last June. A number of survey participants indicated that tariff concerns prompted the more cautious outlook.
• The employment index signaled expansion for the fourth straight month, with January’s 52.3 measure being the highest since September 2023. This is obviously positive as service industries have experienced hiring challenges for years.
• The prices paid index retreated from a two-year high of 64.4 to 60.4, although still elevated as 11 of 17 service industries reported paying higher prices in January.

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