PMI services ended January at 52.5, below the mid-month flash estimate of 52.9 but still the best showing since June last year. The results won't have much impact on expectations for the ISM services index at the top of the hour where Econoday's consensus is calling for a point-and-a-half improvement to 52.1.

New orders for the PMI sample picked up in January and included gains from both domestic and foreign customers. Backlogs rose for the fist time in seven months. The sample increased employment and expressed increased optimism for the year-ahead outlook. Helping optimism is slowing in inflationary pressures with input costs rising at the slowest rate in more than three years and pass through to customers the slowest in 3-1/2 years.

The PMI composite, which includes the previously released 50.7 for manufacturing, ended January at 52.0 for the best reading since July last year. Though offering further evidence of US strength, the services index did miss the consensus and leaves the Relative Performance Index at 2, very near the zero line to indicate that recent economic data are meeting expectations.

No change at the mid-month's 52.9 is the consensus for the services PMI's January final. This index ended December at 51.3.

US Services Purchasing Managers' Index (PMI) is based on monthly questionnaire surveys collected from over 400 U.S. companies which provide a leading indication of what is happening in the private sector services economy. It is seasonally adjusted and is calculated from seven components, including New Business, Employment and Business Expectations.

Investors need to keep their fingers on the pulse of the economy because it indicates how various types of investments will perform. The Markit Services PMI provides advance insight into the services sector, which gives investors a better understanding of business conditions and valuable information about the economic backdrop of various markets. The stock market likes to see healthy economic growth which generally translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly and causing potential inflationary pressures. The PMI data are also used by many Central Banks to help make interest rate decisions.

The IHS Markit Services Flash data give a detailed look at the services sector, the pace of growth and the direction of this sector. Since the service sector accounts for more than three-quarters of U.S. GDP, this report has a significant influence on the markets. In addition, its sub-indexes provide a picture of new business, employment, business expectations and prices.