US services index rises more than expected in December - ISM
Activity in the US services sector improved more than expected in December, according to data released on Tuesday.
The Institute for Supply Management’s services index rose to 55.0 from 53.9 in November, beating expectations for a reading of 54.5.
The non-manufacturing business activity index increased to 57.2 from 51.6, reflecting growth for the 125th consecutive month.
The new orders index printed at 54.9, down from 57.1 in November, while the employment index slipped to 55.2 from 55.5. The prices index came in unchanged at 58.5.
Anthony Nieves, chair of the ISM, said: "The non-manufacturing sector had an uptick in growth in December. The respondents are positive about the potential resolution on tariffs. Capacity constraints have eased a bit; however, respondents continue to have difficulty with labour resources."
Michael Pearce, senior US economist at Capital Economics, said the rebound in the non-manufacturing index last month should dispel any fears that the slump in the manufacturing index reported last week heralds a further economic slowdown.
"Instead, economic growth appears to be bottoming out at close to its trend rate of 2.0%," he said.
"Taken together with the slump in the manufacturing index, a weighted average of the ISM surveys rose to a four-month high of 54.1 in December, from 53.2, consistent with the stabilisation in the alternative Markit composite PMI. Admittedly, the ISM surveys are still consistent on past form with economic growth of just 1.0% annualised in the fourth quarter, but our estimate based on the output data already released is that growth held steady close to 2.0% annualised."