NEW YORK – The U.S. services sector expanded in December as new orders picked up, the Institute for Supply Management reported Wednesday.
ISM's non-manufacturing business activity composite index was 57.1 in December, up from 55.0 in November, on a seasonally adjusted basis, the group said today.
Economists polled by Thomson Reuters had expected a 55.5 level.
An index reading below 50 signals a slowing economy, while a level above 50 suggests expansion.
The prices paid index, closely watched for signs of inflation, jumped to 70.0 from 63.2.
The employment index decreased to 50.5 from 52.7.
The business activity/production index rose to 63.5 from 57.0, the new orders index was at 63.0, up from 57.7; backlog of orders dipped to 48.5 from 51.5; new export orders decreased to 56.0 from 59.5; inventories gained to 52.5 from 51.5; inventory sentiment grew to 61.5 from 60.0; the supplier deliveries index slid to 51.5 from 52.5; and imports decreased to 51.0 from 54.5.
“The NMI (Non-Manufacturing Index) registered 57.1 percent in December, 2.1 percentage points higher than the 55 percent registered in November, and indicating continued growth in the non-manufacturing sector,” said Anthony Nieves, chair of the ISM's Non-Manufacturing Business Survey Committee. “The Non-Manufacturing Business Activity Index increased 6.5 percentage points to 63.5 percent, reflecting growth for the 13th consecutive month at a faster rate than in November. The New Orders Index increased 5.3 percentage points to 63 percent, and the Employment Index decreased 2.2 percentage points to 50.5 percent, indicating growth in employment for the fourth consecutive month, but at a slower rate. The Prices Index increased 6.8 percentage points to 70 percent, indicating that prices increased significantly in December. According to the NMI, 14 non-manufacturing industries reported growth in December. Respondents’ comments vary by company and industry, but overall are mostly positive about business conditions.”
Members' general comments on business in the month included:
“Overall business climate remains reasonably positive.” (Management of Companies & Support Services)
“Pricing pressures are starting to heat up.” (Construction)
“Outlook for 2011 is positive with an increase in spending.” (Finance & Insurance)
“Looks like more budget reductions are coming in the next year.” (Educational Services)
“Cotton prices are moving upward, but prices are being kept in line as the overall Asian market cools somewhat.”(Retail Trade)
“Business picking up for holiday — above expectations.” (Transportation & Warehousing)
