5 February 2010 | Gareth Mytton

Economic activity in the US non-manufacturing sector returned to growth in January, according to the latest Institute for Supply Management (ISM) Report on Business.

January’s non-manufacturing index of 50.5 per cent – where a figure over 50 indicates expansion – follows two consecutive monthly falls in economic activity in November and December.

Order books grew more quickly than in December, with the index rising from 52 per cent to 54.7 per cent last month.

Companies cut jobs for the 25th successive month, albeit more slowly than in recent months, as decline in the employment index eased to 44.6 per cent in January from 43.6 per cent the month before.

The prices paid for materials and services rose for the sixth month in a row and more quickly than in December, at 61.2 per cent, a 1.6 percentage point increase. Twelve industries said prices had risen on a month earlier, while three reported a fall.

Meanwhile, activity rose in the US manufacturing sector for the sixth consecutive month. Activity increased to 58.4 per cent in January, from 54.9 per cent in December.

The new orders index rose to 65.9 per cent, a 1.1 percentage point increase on December. In contrast to non-manufacturing sectors, factories took on more staff in January, for the second month in a row.

“This month’s report provides significant assurance that the manufacturing sector is in recovery,” said Norbert Ore, chair of the ISM manufacturing business survey committee.