Economic activity in the US services sector grew in January after contracting in December, according to the Institute of Supply Management’s Services PMI released today. The measure of economic activity in the services sector rose to 55.2% in January from a reading of 49.6% in December.

January’s reading indicated the overall economy is expanding; readings above 50.1% in the Services PMI over time generally indicate an expansion of the overall economy.

“Ten industries reported growth in January, according to the Services PMI, which was in expansion territory after a single month of contraction and the prior 30-month period of growth,” said Anthony Nieves, chair of the Institute for Supply Management’s Services Business Survey Committee. “Business Survey Committee respondents indicated that capacity and logistics performance continue to improve. Although responses varied by industry and company, the majority of panelists indicated that business is trending in a positive direction.”

The employment measure of the index registered 50%, up 0.6 percentage points from the seasonally adjusted December reading of 49.4%.

Comments from respondents include:

• “Unable to hire qualified labor — supply is thin.”
• “We continue to let people go, not replacing any open positions.”
• “Some companies still find it difficult to fill open positions, while others are facilitating staff reductions,” Nieves said.

The ISM Services PMI is based on data compiled from purchasing and supply executives across the US.