MNI INTERVIEW: Consumers Lift U.S. Services Amid Global Risks

--ISM Chair Says Companies Struggling To Find Workers

By Ryan Hauser

     WASHINGTON (MNI) - U.S. consumer confidence is winning out over global

uncertainty at service companies where activity reached a five-month high in

January, ISM survey committee chair Anthony Nieves told MNI.

     ISM's Non-Manufacturing Index rose to 55.5 from December's 54.9. That adds

to the optimism from Monday's ISM factory index that saw a surprise return of

expansion in manufacturing.

     "Consumer confidence is definitely driving things," Nieves said of the

services report. "If manufacturing can get out of the doldrums--and it looks

like they're set up for that-- that will bode very well."

     Consumer spending and record low unemployment are aiding U.S. growth amid

global trade disputes and more recent uncertainty from China's coronavirus

outbreak. Markets have priced in a Fed rate cut later this year, following three

in 2019 on weak inflation and global demand. While President Donald Trump backed

a Phase One pact with China and the USMCA, his administration has also signaled

potential tariffs on the UK and EU this year. 

     Geopolitical risks may still be holding back U.S. service-sector growth, he

said. "As we've had issues with Europe," Nieves said, "we're starting to see

them do more sourcing [domestically] rather than going to U.S. companies."

     The ISM employment sub-index still showed expansion in January with a

reading of 53.1, even though that was a 1.7 point decline from December. 

     "The rate of growth has declined only because of the labor pool not being

there," said Nieves. "It's tough--we have so many comments each month from our

respondents just telling us that they're having difficulty in recruiting and

finding workers," he said. 

     "What we're seeing a lot right now is just people switching companies," he

said.

--MNI Washington Bureau; +86 (10) 8532-5998; email: ryan.hauser@marketnews.com

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