The Institute for Supply Management (ISM) reported on Wednesday its non-manufacturing index (NMI) came in at 55.5 in January, which was 0.6 percentage points higher than the revised December-2019 reading of 54.9 (originally 55.0 percent). This pointed to the biggest expansion in the services sector since August.

Economists forecast the index to stay at 55 last month. A reading above 50 signals expansion, while a reading below 50 indicates contraction.

Of the 18 manufacturing industries, 12 reported growth last month, the ISM said, adding that the respondents remain mostly positive about business conditions and the overall economy but note difficulty with labor resources.

According to the report, the ISM's non-manufacturing business activity measure rose to 60.9 percent, up 3.9 percentage points from December reading of 57.0 percent. That reflected growth for the 126th consecutive month, at a faster rate in January. The New orders gauge increased to 56.2 percent; up 0.9 percentage point from 55.3 percent in December. Meanwhile, the Employment indicator fell 1.7 percentage points in January to 53.1 percent from the seasonally adjusted December reading of 54.8 percent. The Prices Index reading dropped 3.8 percentage points to 55.5 from the December reading of 59.3 percent.