The U.S. services sector expanded at a slightly faster pace in December as the non-manufacturing business activity composite index was 56.1 in the month, compared to 54.7 in November, on a seasonally adjusted basis, the Institute for Supply Management reported Friday.

Economists polled by Thomson Reuters had expected a 54.3 level.

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

The prices paid index slid to 56.6 from 57.0.

The employment index increased to 56.3 from 50.3.

The business activity/production index slid to 60.3 from 61.2, the new orders index was at 59.3, up from 58.1; backlog of orders decreased to 49.5 from 53.5; new export orders gained to 49.5 from 48.0; inventories grew to 50.0 from 47.0; inventory sentiment dipped to 58.0 from 62.5; the supplier deliveries index decreased to 48.5 from 49.0; and imports slumped to 49.0 from 55.5.

Members' general comments on business in the month included:

"Although our business activity level is the same as a month ago, it is still higher than normal with plans to continue at that rate for the foreseeable future." (Educational Services)

"Business conditions are picking up despite the current economic state and the federal budget issues." (Professional, Scientific & Technical Services)

"Consumer optimism increased; lower gasoline prices lead to higher retail sales." (Public Administration)

"The holidays will slow construction some, but overall business remains about 25 percent ahead of last year. Weather has been favorable." (Wholesale Trade)

"Due to the extra week between Thanksgiving and Christmas, we are seeing our customers shopping later this year." (Retail Trade)

"Business has picked up significantly during this last quarter of the year." (Transportation & Warehousing)

"Preparing for substantial business due to heavier than normal crop forecast." (Agriculture, Forestry, Fishing & Hunting)

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