The U.S. services sector surged to its best level in seven years in January, but jobs remain elusive according to a report released today.

The Institute for Supply Management said its index of U.S. non-manufacturing activity rose to 65.7 last month from 58.0 in December, a record high since the series began in 1997. It was far above economists’ forecasts for a 65.0.

But a key measure of employment slipped, as firms remain reluctant to add to payrolls.

The U.S. economy created only 1,000 new jobs in December, and hopes are high for a solid increase of 150,000 payrolls in January. But similar hopes have been dashed in recent months by anemic job creation. The next U.S. payrolls report is due on February 6.

In separate release this morning, the U.S. Commerce Department said factories orders rebounded in December, rising by a strong 1.1%.

The over-the-month increase came after orders placed with factories dropped by 0.9 % in November. The latest snapshot of manufacturing activity was better than economists were expecting. They were forecasting a modest 0.3% rise in orders for December.

The 1.1% increase in overall factory orders in December was the largest rise since October, when orders went up by 2.4%.

Orders for “nondurable” goods rose by 2% in December, on top of a 0.8% increase in November. Orders placed with factories for food, clothing, leather goods, petroleum and coal products, and plastics products all showed gains.

Orders for “durable” goods rose by 0.3% in December, an improvement from November’s 2.4% decline. Stronger demand for machinery and electrical equipment were among the categories posting an increase in orders, while orders for cars and furniture were among categories in which orders declined.

Excluding transportation equipment, which swings widely from month to month, all other orders to factories rose by 0.9% in December, a turnaround from the 1.1% drop seen in November.