The Institute
for Supply Management (ISM) announced on Friday that its Services PMI came in
at 50.6 per cent in December, recording a drop of 2.1 percentage points from an unrevised November reading of 52.7 per cent. The latest figure
indicated that the U.S. services sector expanded for the 12th straight month, albeit
at a softer pace than in the previous seven months.
Economists had expected
the indicator to slip to 52.6 in December.
A reading above
50 signals expansion, while a reading below 50 indicates contraction.
Of the 18
services industries, nine reported growth last month amid remaining concerns
related to economic uncertainty, geopolitical events and labour constraints, the
ISM noted.
According to
the report, the Production index jumped 1.5
percentage points to 56.6 per cent in December, indicating growth in output for
the 43rd month in a row. Meanwhile, the New Orders gauge decreased 2.7
percentage points to 52.8 per cent, indicating expansion for the 12th
consecutive month. Elsewhere, the Employment measure plunged 7.4 percentage
points to 43.3 per cent, indicating employment activity in the services sector shrank
in December after six straight months of growth. The Inventories indicator declined
5.8 percentage points to 49.6 per cent, indicating inventories returned into negative
territory after a one-month growth. The Backlog of Orders index rose 0.3
percentage point to 49.4 per cent, staying in contraction territory for the
second successive month.
On the price front, the Prices index fell 0.9 percentage point to 57.4 per cent, indicating that prices paid
by services organizations for materials and services increased in December for
the 79th month running.