The U.S. services sector expanded in December as the non-manufacturing business activity composite index was 55.9, compared to 57.4 in November, on a seasonally adjusted basis, the Institute for Supply Management reported Friday.

An index reading below 50 signals a slowing economy, while a level above 50 suggests expansion.

Economists polled by IFR Markets had expected a 57.6 level.

The prices paid index crept to 60.8 from 60.7. The employment index gained to 56.3 from 55.3.

The business activity/production index fell to 57.3 from 61.4, the new orders index was at 54.3, down from 58.7; backlog of orders dropped to 50.0 from 51.5; new export orders decreased to 56.5 from 57.0; inventories slid to 53.5 from 54.5; inventory sentiment gained to 62.5 from 56.0; the supplier deliveries index rose to 55.5 from 54.0; and imports held at 52.5.

Members' general comments on business in the month included:

  • “Many suppliers are proposing price increases, but few are being implemented. Increases in volume and efficiencies seem to be outperforming commodity pricing.” (Accommodation & Food Services)
  • “December is slowing, as is seasonally expected after a strong fall. Business in general is strong [and] within the normal pattern of seasonal fluctuation.” (Management of Companies & Support Services)
  • “Some improvement is jobs from the private sector.” (Professional, Scientific & Technical Services)
  • “Lumber prices are increasing due to product [being] damaged in the recent wildfires. Duties on steel from Vietnam is expected to cause an increase in steel prices. Ongoing shortages in construction related [to] labor continue to be a problem.” (Construction)
  • “Ending the year with profits and business levels on track. 2018 is projected to be as productive with an optimistic outlook.” (Finance & Insurance)
  • “IV solutions are still on national manufacturer back order. Hospital gauze back orders are also causing issues in the industry.” (Health Care & Social Assistance)
  • “We are seeing a resurgence in the business activity of our oil and gas customers, in a positive direction that is impacting our sales.” (Other Services)
  • “Steady end-of-year demand. Forecasting substantial increase in 2018 activity.” (Public Administration)
  • “Sales have slowed in food supply after last month’s buildup for the holidays.” (Retail Trade)

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.
Gary Siegel

Gary Siegel

Gary Siegel has been at The Bond Buyer since 1989, currently covering economic indicators and the Federal Reserve system.