ISM services index drops to 55.9 in December
Activity in the US services sector unexpectedly slowed in December, according to data released on Friday.
The Institute for Supply Management's non-manufacturing business activity index fell to 55.9 from 57.4 in November, missing expectations for a reading of 57.6.
The new orders index printed at 54.3 in December from 58.7 the month before, while the employment index rose to 56.3 from 55.3 and the prices index increased to 60.8 from 60.7.
Ian Shepherdson, chief economist at Pantheon Macroeconomics, said the figures are solid despite the headline dip.
"This dip leaves the index below the level implied by the recent growth rate of core retail sales, for the first time since October 2016. In other words, it looks more like a correction than the start of a trend decline. The October and November readings, 59.8 and 60.1 respectively, always looked too high to be sustained.
"We care more about the employment sub-index, which rose to 56.3 from 55.3, and is now consistent, other things equal, with payroll growth of about 250K. The survey has overstated actual payroll growth since the middle of last year, though, perhaps suggesting that firms are finding it hard to fill all their open positions."
Capital Economics said the unexpected decline in the ISM non-manufacturing index echoes the slightly weaker gain in non-farm payrolls in suggesting that the economy may have lost a little momentum at the end of 2017.
"Nonetheless, we still estimate that fourth-quarter GDP growth was a healthy 2.7% annualised and, given the fiscal stimulus, expect that strength to continue for a while yet."