ISM Services PMI Rises To 53.4 In January, Exceeding Expectations

Key Insights

• ISM Services PMI increased from 50.6 in December to 53.4 in January. 
• New Orders Index improved from 52.8 to 55.
• S&P Global Services PMI increased from 51.4 in December to 52.5 in January. 

On February 5, 2024, the Institute for Supply Management released ISM Services PMI report. The report indicated that ISM Services PMI improved from 50.6 in December to 53.4 in January, compared to analyst consensus of 52. Numbers above 50 show expansion.

ISM Services PMI is above the 50 level for the 13th consecutive month, highlighting the strength of the services sector.

New Orders Index increased from 52.8 in December to 55 in January, while Employment Index improved from 43.8 to 50.5.

The Institute for Supply Management commented: “The overall growth rate increase in January is attributable to faster growth of the New Orders, Employment, and Supplier Deliveries indexes. The majority of respondents indicate that business is steady.”

Today, traders also had a chance to take a look at the final reading of S&P Global Services PMI report for January. The report showed that S&P Global Services PMI increased from 51.4 to 52.5, compared to analyst consensus of 52.9. Composite PMI improved from 50.9 to 52.

U.S. Dollar Index tested new highs after the release of the better-than-expected ISM Services PMI report. Currently, U.S. Dollar Index is trying to settle above the 104.50 level. Traders focus on rising Treasury yields and prepare for a more hawkish Fed.

Gold tests support at $2015 – $2025 as traders react to rising Treasury yields and stronger dollar. The recent reports from the U.S. show that the economy remains in a decent shape, which means that Fed may prefer to leave the federal funds rate unchanged at the next meeting. This scenario is bearish for gold and other precious metals that pay no interest.

SP500 pulled back after the strong Services PMI report. Traders worry that economic data will force the Fed to leave rates unchanged in the near term.

For a look at all of today’s economic events, check out our economic calendar.