MNI INTERVIEW: US Service Recovery To Continue- ISM's Nieves

The U.S. service sector is likely to see further recovery in coming months as fiscal aid keeps small businesses afloat and a Covid vaccine restores normalcy sooner than expected, Institute for Supply Management Chair Anthony Nieves told MNI Thursday.

"We're on this path of growth and it should continue,'' he said.

The ISM Services PMI rose 1.3 points to 57.2 in December, the highest reading since September. Figures exceeding 50 signal expansion.

But even while the business activity index hit 59.4 and the new orders index grew by 1.3 points to 58.5, the employment index fell 3.3 points to 48.2.

"It was only a given that this was going to happen," Nieves said of employment weakness, citing a wave of new shutdowns.

VACCINE AND FISCAL RELIEF

Employment and business activity will remain muted as long as shutdowns are in place, Nieves said, particularly in the foodservice, accommodation and personal care services.

The latest USD600 relief checks are more of a "short-term solution" given their minimal impact on spending power, Nieves said. The renewed Paycheck Protection Program will be a more effective way to keep businesses viable in the longer-term, he said.

News on the new stimulus package had little impact on the ISM survey results because it was signed into law at the end of last month, Nieves said. Survey respondents through December were mostly encouraged by the approval and early distribution of the Pfizer-BioNTech and Moderna Covid-19 vaccines.