The U.S. ISM services PMI fell from 54.1 to 52.8 in January instead of rising to the projected 54.2 figure, reflecting a slower pace of growth for the month.
Components of the report revealed that the employment index remained in expansion for the fourth consecutive month, as it rose 1 percentage point from December’s 51.3 figure to 52.3.
Key Takeaways:
- Business Activity Index came in at 54.5, down 3.5 percentage points from the previous 58 reading
- New Orders Index recorded a reading of 51.3, 3.1 percentage points lower than the earlier 54.4 figure
- Employment Index landed at 52.3 percent, marking a 1 percentage point increase from the previous 51.3 figure
- Prices Index registered 60.4 in January, a 4 percentage points down from December’s reading of 64.4
Link to official U.S. ISM services PMI (January 2025)
Chair of the Institute for Supply Management, Steve Miller, noted that “Fourteen industries reported growth in January, five more than the previous month’s total. The Services PMI® has expanded in 23 of the last 25 months dating back to January 2023.”
He also explained that poor weather conditions were noted by many respondents as impacting business levels and production and, as in the December report, “many panelists also mentioned preparations or concerns related to potential U.S. government tariff actions.”
Market Reactions
U.S. Dollar vs. Major Currencies: 5-min
Overlay of USD vs. Major Currencies Chart by TradingView
The U.S. dollar, which had been chopping mostly sideways leading up to the ISM services PMI release, dipped against majority of its counterparts upon seeing weaker than expected results.
USD/JPY saw the steepest decline while the dollar also chalked up notable dips against the Aussie and Kiwi, but it managed to limit it losses versus the euro. The Greenback held its ground versus the weaker Loonie and pound, even staging a gradual climb against the former in the hours after the ISM report.
Against the rest of its peers, the dollar appeared to pare its post-ISM services PMI losses as the session went on, with traders likely focusing on the uptick in employment and its positive implications for Friday’s NFP release.
