Steady service sector will probably show growth
By Pamela Yip
Service industries in the U.S. probably grew in January at about the same pace as in the prior month, showing the biggest part of the economy is weathering Washington budget battles, economists said before a report this week.
The projected 55 reading in the Institute for Supply Management’s non-manufacturing index would follow December’s 55.7, the highest level in 10 months, according to the median forecast of 62 economists surveyed by Bloomberg before Tuesday’s figures from the Tempe, Arizona-based group.
Another report may show the trade deficit narrowed in December.
A pickup in consumer spending and a rebound in housing will probably keep benefiting non-manufacturers such as MasterCard Inc. and D.R. Horton Inc., helping the world’s largest economy strengthen after it stalled in the fourth quarter. A job market that continues to heal will also support households trying to manage a tighter budget after the payroll tax increased.
The economy has “gotten through this period of uncertainty reasonably well,” said Lou Crandall, chief economist at Wrightson ICAP LLC in Jersey City, New Jersey. The data is “consistent with moderate business expansion.”
Readings greater than 50 signal expansion for the ISM services index, which includes industries ranging from utilities and retailing to health care, housing and finance.
Exports grew in January for a second month after contracting since June, which signals overseas demand may continue to benefit American companies and contribute to a narrowing in the trade deficit.
The gap shrank to $45.8 billion in December from $48.7 billion the prior month that was the largest since April, according to the median forecast of economists surveyed before the Commerce Department’s report on Friday.