The numbers: A barometer of business conditions at service-style companies such as restaurants and retailers slid 2.4 points in January to a 16-month low of 59.9%, ISM said Thursday, during a record coronavirus outbreak that sapped the economy.
The Institute for Supply Management’s iindex of service companies that employ most Americans touched the lowest level since February 2021.
Numbers over 50% are viewed as positive for the economy, however, and anything over 55% is considered exceptional.
A similar ISM survey of manufacturers also showed companies growing at a somewhat slower pace early in the new year.
Big picture: Businesses big and small, in manufacturing and services, all took a hit last month as the contagious omicron strain of the coronavirus raced across the country. Millions of people called in sick.
Service-style companies suffered the most because they usually deal with customers directly and are more affected by government restrictions.
With omicron fading, companies are likely to rebound quickly. Yet many are still struggling to cope with persistent labor supply shortages that are expected to last through the end of the year.
Market reaction: The Dow Jones Industrial Average and S&P 500 index declined in Thursday trades.