Investing.com – Activity in the U.S. services sector increased its expansion in January, rising to more than a one-year high and bolstering optimism over the state of the U.S. economy, according to preliminary data released on Thursday.
In a report, market research group Markit said that its flash services purchasing managers’ index (PMI) rose to 55.1 in January, from the prior month’s reading of 53.9. That was its fastest expansion since November 2015.
Analysts had expected the reading to increase to 54.4.
On the index, a reading above 50.0 indicates expansion, below indicates contraction.
Services make up approximately 80% of the U.S. economy which makes the data key for interpreting growth.
Markit indicated that the survey showed faster rises in business activity and new work with firms in the sector reporting the strongest business outlook for just under two years.
The report also revealed that input cost inflation had slowed since December.
Markit chief economist Chris Williamson commented that, combined with the manufacturing data earlier in the week, the two surveys suggested growth of 2.5% in January, in what would be a faster expansion in 2016.
“The strong start to 2017 and bullish mood for the year ahead adds to our expectation that we will see the Fed hike rates a further three times in 2017,” Williamson said.
Following the report, EUR/USD traded at 1.0688 from 1.0673 prior to the release, GBP/USD was at 1.2577 from 1.2574 earlier, while USD/JPY was at 114.18 compared to 114.31 previously.
The US dollar index, which tracks the greenback against a basket of six major rivals, was at 100.42, compared to 100.53 ahead of the report.
Meanwhile, U.S. stocks were trading flat after the open. The Dow 30 gained 19 points or 0.09%, the S&P 500 inched up less than a point, or 0.01%, while the tech-heavy Nasdaq Composite advanced 8 points or 0.13%.
Elsewhere, in the commodities market, gold futures traded at $1,190.05 a troy ounce, compared to $1,186.50 ahead of the data, while crude oil changed hands at $53.77 compared to $53.81 previously.