Feb. 4 (Bloomberg) -- An index of U.S. service industries may have increased in January to the highest level in three months, according to a survey of economists before today's industry report. The Institute for Supply Management's measure of retail, financial services, construction and other non-manufacturing businesses probably rose to 60, the highest since October, from 58.6 in December, according to the median of 53 economists surveyed by Bloomberg News. A reading of more than 50 indicates more companies say business is expanding than shrinking. The services report is set for 10 a.m. Washington time.
Increased manufacturing may lead to greater demand for services, which account for 85 percent of the economy, from companies including United Parcel Service Inc. The Commerce Department, also at 10 a.m., may report factory orders increased 0.2 percent in December after falling 1.4 percent in November, according to a survey of economists. ``With the strength now picking up in the industrial sector we should get positive feedback in the rest of economy,'' said Lynn Reaser, chief economist at Banc of America Capital Management in St. Louis. ``We are beginning to see signs of improvement ranging from advertising to transportation.'' The Institute for Supply Management's services index is based on a survey of more than 370 non-manufacturing companies. Estimates by economists for last month ranged from 56.5 to 64.5. The institute's separate January factory index, which was released Monday, rose to 63.6, the highest since 1983, reflecting a jump in production.
Holiday Demand
United Parcel, the world's largest package-delivery company, said last week that earnings in the fourth quarter rose 15 percent as it handled more holiday packages. The Atlanta-based company said it moved 20 million packages on Dec. 23, the most in a single day. The rise in shipments underscore the recovery in manufacturing, Chief Financial Officer Scott Davis told Bloomberg News in a televised interview. ``It's something we've been looking for the last two or three years,'' Davis said.
Increased demand for services may help boost hiring in coming months. United Parcel expects to hire about 4 percent more drivers and package sorters this year, a rate that keeps pace with the company's targeted increase in U.S. package shipments, Davis said in an interview. That works out to about 12,600 hires, based on a U.S. workforce of 317,000. Service-producing companies have added 340,000 in the past six months, compared with manufacturers, which have eliminated 188,000 over the same period. A report Friday from the Labor Department is forecast to show employment increased 170,000 in January, the most since November of 2000. The unemployment rate may have held at 5.7 percent, according to the median forecast in a Bloomberg survey. //www.bloomberg.com