U.S. Services Activity Grew Only Slightly in December -- ISM

By Ed Frankl

The U.S. services sector grew at a slower pace than expected in December as demand cooled and employment conditions slumped, according to survey data released Friday.

The Institute for Supply Management's services-activity index fell to 50.6 in December from 52.7 in November. Economists had expected the index to dip less steeply to 52.5, according to a poll compiled by The Wall Street Journal ahead of the release.

Despite the decline compared with November, a reading above the no-change mark of 50 indicates expansion in the services sector, which has grown for the last 12 months, and 42 of the past 43, the ISM said.

"The services sector had a pullback in the rate of growth in December, attributed to the decrease in the rate of growth for new orders and contraction in employment," said Anthony Nieves, chair of the Institute for Supply Management.

ISM's employment index sank to 43.3 from 50.7 in November, its new orders index ticked down to 52.8 from 55.5 in the prior month, though the ISM's business-activity index rose by 1.5 points on month to 56.6. Half of 18 sub-industries ISM measures reported growth in December, it added.

Among respondents, there were concerns related to economic uncertainty, geopolitical events and labor constraints, Nieves added.

"Revenues remain strong but labor is still constrained, and suppliers are floating price increases beginning Jan. 1, which will likely further reduce already low operating margins," said one respondent to the survey from the healthcare and social assistance sector.

Write to Ed Frankl at [e-mail]

(END) Dow Jones Newswires

01-05-24 1035ET