By Colin Kellaher

Services activity in the middle of the U.S. edged higher in January, as did expectations for future activity, according to a monthly survey by the Federal Reserve Bank of Kansas City.

The Tenth District Services Survey's composite index, a weighted average of indexes covering revenue/sales, employment and inventory, came in at 15 for January, up from 11 in December and 10 for November. Readings above zero indicate expansion, while those below zero indicate contraction.

The Kansas City Fed said the increase reflects a rise in activity in wholesale, retail, transportation, professional and high-tech services, and healthcare activity, while auto, real estate, tourism and restaurant activity decreased in January.

The Kansas City Fed said 19% of businesses surveyed said the recent surge in Covid-19 cases sparked by the Omicron variant had a strong negative effect on business activity, while another 62% reported a slight negative effect.

Despite more firms reporting negative effects from this wave of Covid than previous waves, the Kansas City Fed said expectations for future services activity rose to 37 in January from a reading of 33 in December.

The Kansas City Fed's survey includes participants from such service industries as retail and wholesale trade, automobile dealers, real estate and restaurants. The survey provides information on current services activity in the Tenth District, which includes Colorado, Oklahoma, Wyoming, Nebraska, Kansas, the northern half of New Mexico and the western third of Missouri.

The bank's monthly manufacturing survey, released Thursday, showed that factory activity in the central region of the U.S. grew at broadly the same pace in January compared with the previous month.

Write to Colin Kellaher at colin.kellaher@wsj.com

(END) Dow Jones Newswires

January 28, 2022 11:46 ET (16:46 GMT)

Copyright (c) 2022 Dow Jones & Company, Inc.