Services Index Offers Signs of a Solidifying Recovery

U.S. service businesses grew in January and some, such as wholesalers and media, hired workers for the first time in nearly two years, providing evidence that the economy’s uneven recovery from recession may be solidifying.

The Institute for Supply Management said Wednesday that its index of nonmanufacturing activity edged up to 54.5 from a revised 54.2 in December, posting a 12th straight month of growth. A jump in the new-orders component also provided hope for solid services growth in coming months.

“There’s no indication we’re slipping back into recession,” said Ralph Kauffman, ISM’s director for the nonmanufacturing survey.

A reading above 50 suggests growth in the services index, which tracks services ranging from tourism to legal help, banking and entertainment, making up about 80% of the economy.

ISM’s more closely watched survey of manufacturing Monday posted a third month of growth and showed the factory sector rebounding from its brief downturn late last year.

Unlike in manufacturing where layoffs persist, the services index showed hiring for the first time since February 2001, with that index rising to 50.3 from 46.9.

The hiring came in wholesale trade and communications, the report said.

Utilities, government, transportation companies and retailers cut jobs.