Washington, Feb. 5 (Bloomberg) -- Services, the largest part of the U.S. economy, probably expanded in January for a 12th consecutive month, helping to support the recovery, economists said in advance of today's economic report. The Institute for Supply Management's index for non- manufacturing businesses probably eased to 54 last month from 54.2 in December, a survey of economists found. The index has held above 50, signaling expansion, since last February. ``Consumers are continuing to keep this economy afloat by spending,'' said Chris Rupkey, senior economist at Bank of Tokyo- Mitsubishi Ltd. in New York. ``The service economy's strength bodes well for this recovery.''
Rising incomes and the lowest mortgage rates in more than four decades have given consumers the means to spend. Growth in services, which account for 85 percent of the economy, may keep the recovery from slowing. Profit at Airborne Inc., the third- largest U.S. carrier of air freight, rose more than fivefold in the fourth quarter. The Tempe, Arizona, institute's index, which is based on a survey of more than 370 companies, will be issued at about 10 a.m. Washington time. The expected January reading reflects the median of 47 forecasts in a Bloomberg News survey. A companion report, the institute's index of manufacturing, issued Monday, indicated a third straight month of growth in factory activity, which accounts for one-seventh of the economy. The January manufacturing index was 53.9, following a December value of 55.2.
Faster Economic Growth
Growth in the economy may rebound to a 2.7 percent annual rate during the current quarter from a 0.7 percent pace in the final three moths of last year, the latest Blue Chip Economic Indicators Survey of economists showed. In the third quarter, the economy expanded at a 4 percent rate. The economy ``is recovering,'' said Christopher Low, chief economist a FTN Financial in New York. ``It's just not recovering fast enough to generate jobs or profits.'' Some companies are reaping the benefits of growth in the services industry. Airborne said its fourth-quarter profit rose as shipments by truck increased and as it made money on international deliveries. Sales rose 11 percent to $896.8 million from $804.5 million. Airborne, the third-largest carrier of air freight, has focused on increasing less-expensive ground and residential deliveries as companies ship fewer goods by air and as consumers order more over the Internet. Personal consumer spending increased last month at the fastest rate in five months, led by a surge in buying of durable goods such automobiles, the Commerce Department said. Spending on services alone increased 0.2 percent in December after rising 0.3 percent in November. //www.quote.bloomberg.com