Heavy Duty Trucking Logo
MenuMENU
SearchSEARCH

Economic Watch: Service Sector Loses Steam, Consumer Confidence Up

The latest reading on the health of the nation’s non-manufacturing/service sector of the economy shows it starting the year with slower growth. A separate report shows consumers aren’t paying much heed to recent volatility in financial markets as Federal Reserve officials begin a two-day meeting.

Evan Lockridge
Evan LockridgeFormer Business Contributing Editor
January 26, 2016
Economic Watch: Service Sector Loses Steam, Consumer Confidence Up

 

4 min to read


The latest reading on the health of the nation’s non-manufacturing/service sector of the economy shows it starting the year with slower growth. A separate report shows consumers aren’t paying much heed to recent volatility in financial markets as Federal Reserve officials begin a two-day meeting.

The just released Flash U.S. Services Purchasing Managers’ Index from the financial information services provider Markit fell to 53.7 in January from 54.3 in December. Although business activity continues expanding, the headline reading has now signaled weaker overall growth in four of the past five months.

Ad Loading...

A reading above 50 indicates the service sector is expending; one below 50 shows contraction.

A number of survey respondents suggested that spending cutbacks across the energy sector had a negative impact on their business activity.

According to the report, service sector firms continued to cite improving domestic economic conditions and rising client demand. However, a number of survey respondents suggested that spending cutbacks across the energy sector had a negative impact on their business activity. There were also some reports that the strong U.S. dollar remained a headwind to growth at the start of 2016.

Growth of new business accelerated from December’s 11-month low, but was still weaker than seen on average in 2015. The survey also indicated that around seven times as many U.S. service providers, 36%, anticipate a rise in business activity over the next 12 months as those that forecast a decline, 5%. Survey respondents mainly attributed their optimism to supportive economic conditions and expected new business gains.

Ad Loading...

“A struggling manufacturing economy is being accompanied by a services sector where growth showed further signs of losing momentum in January even before the bad weather hit,” said Chris Williamson, chief economist at Markit. “The data are by no means disastrous, signaling a 1.5% annualized rate of economic growth at the start of the year, but the drop in business confidence to one of its lowest levels for over five years suggests that firms are bracing themselves for worse to come.”

He said worries about financial market volatility, the impact of slower growth overseas, a downturn in the energy sector and uncertainty about higher interest rates all took their toll and set the scene for further weakness in coming months.

Consumer Confidence at Three-Month High

Meantime, a report from the private research group The Conference Board shows consumers’ overall feeling are better than they were a month ago.

Its Consumer Confidence Index, which had increased in December to a revised 96.3, improved moderately in January to 98.1. This compares to a post-recession high of 102.6 hit last September. The latest number is the best in three months.

The Present Situation Index was unchanged at 116.4, while the Expectations Index increased from 83 to 85.9 in January.

Ad Loading...

“Consumer confidence improved slightly in January, following an increase in December,” said Lynn Franco, director of economic indicators at The Conference Board. “Consumers’ assessment of current conditions held steady, while their expectations for the next six months improved moderately. For now, consumers do not foresee the volatility in financial markets as having a negative impact on the economy.”

The percentage of consumers saying business conditions are “good” was virtually unchanged at 27.2%, while those saying business conditions are “bad” declined slightly from 18.9% to 18.5%. Consumers’ assessment of the labor market was modestly more positive.

Their optimism about the short-term outlook improved somewhat in January. The percentage of consumers expecting business conditions to improve over the next six months rose from 14.5% to 16.2%, while those expecting business conditions to worsen edged down from 10.8% to 10.3%.

Consumers’ outlook for the labor market was also slightly more optimistic. Those anticipating more jobs in the months ahead increased from 12.4% to 13.2%, while those anticipating fewer jobs decreased slightly from 16.8% to 16.5%.

The conventional wisdom is that policymakers will hold off any hike in interest rates following one last month, the first hike in seven years.

Both reports come as the U.S. Federal Reserve’s Open Market Committee began two days of meetings on Tuesday in which it expected to release a statement on Wednesday.

Ad Loading...

The conventional wisdom is that policymakers will hold off any hike in interest rates following one last month, the first hike in seven years, and the ugly start financial markets experienced early this year.

Since the last Fed meeting, most readings of the economy has been anything but stellar with housing being one of the few bright spots. And while manufacturing has rebounded this month, according to a preliminary report, its still at its second lowest level in a little more than two years.

More Fleet Management

Truck on divided interstate highway driving toward sunrise
Fleet Management•October 27, 2026

Your Trucks Are Busy. That Doesn’t Mean They’re Winning.

High utilization doesn’t always mean strong margins. Looking beyond the current load can help fleets make better dispatch decisions and get more value from each truck’s time.

Read More →
ATA economist Bob Costello speaking beside a graph showing truckload operating costs rising as freight revenue per mile declined after 2022.
Fleet Management•by Deborah Lockridge•October 22, 2026

Why This Trucking Recovery Is Different

Freight demand remains sluggish, but rising costs and tougher enforcement have taken enough capacity out of the market to change the outlook for motor carriers.

Read More →
PS Coach tablet interface showing a driver’s coaching inbox, safety event video and coaching advice for a harsh-braking event.
Fleet Management•by News/Media Release•October 21, 2026

Platform Science Adds Dispatch and Safety Tools

Four additions to PS Fleet help fleets monitor loads, manage driver coaching, share truck locations and adjust video system settings.

Read More →
Ad Loading...
Screen capture showing PrePass Intelligence data on tolls
Fleet Management•by News/Media Release•October 21, 2026

PrePass Intelligence Mines Fleet Bypass, Toll and Safety Data

PrePass Intelligence helps fleets measure bypass savings, flag potential toll overcharges, and spot suspicious transactions by combining data from separate systems.

Read More →
Computer screen showing examples of what fleets could ask Motive AI Agents to do
Fleet Management•by Staff•October 20, 2026

Motive Adds AI Agents for Fleet Operations

New tools automate follow-up on fleet data, from maintenance work orders to driver alerts, with two-way voice conversations planned for later this year.

Read More →
Graphic art with a heavy-duty tractor trailer and a work truck with the words "trivia lunch"
Fleet Management•by Lauren Fletcher•October 19, 2026

Can You Beat Our Trucking Trivia Challenge?

Test your truck knowledge with 19 trivia questions from Heavy Duty Trucking Exchange. Can you keep up with the fleet pros?

Read More →
Ad Loading...
Four horizontal and two vertical video screens show different aspects of BeyondTruck's new compatibility engine
Fleet Management•by Deborah Lockridge•October 19, 2026

BeyondTrucks Adds Rules Checks to Dispatch

New Compatibility Engine checks driver qualifications, equipment requirements and fleet policies before loads are dispatched.

Read More →
Gloved hand fueling a truck beside a graphic listing ATRI’s top three trucking concerns for 2026: fuel prices, lawsuit abuse reform and CSA.
Fleet Management•by Deborah Lockridge•October 19, 2026

Diesel Prices Hijack Trucking’s Worry List

ATRI’s annual survey finds cautious optimism about freight, but diesel costs, litigation, and insurance continue to squeeze fleets. Drivers have different priorities on several issues.

Read More →
Illustration showing ladders against a blue background with Heavy Duty Trucking Emerging Leaders logo and the words "2026 nominations now open"
Fleet Management•by Staff•October 16, 2026

Nomination Deadline Extended for HDT Emerging Leaders

Just a few more days to nominate accomplished trucking fleet professionals under 40 who are making an impact and helping lead the industry forward for the HDT Emerging Leaders award. Deadline extended to October 20!

Read More →
Ad Loading...
Headshot of Mark Colson in front of a truck grille next to an American Trucking Associations logo
Fleet Management•by Deborah Lockridge•October 15, 2026

What Will ATA’s New Leader Bring to Trucking's Table?

Incoming President and CEO Mark Colson’s record in Alabama offers clues about his priorities and approach following Chris Spear’s abrupt departure as the head of the American Trucking Associations.

Read More →