U.S. Services Index Rises More Than Expected In December

(RTTNews) - The Institute for Supply Management released a report on Tuesday showing its reading on U.S. service sector activity increased by more than expected in the month of December.

The ISM said its services PMI climbed to 54.1 in December from 52.1 in November, with a reading above 50 indicating growth. Economists had expected the index to rise to 53.3.

The bigger than expected increase by the headline index partly reflected a jump by the business activity index, which shot up to 58.2 in December from 53.7 in November.

"Some of the increased business activity seems to have been driven by preparation for demand in the new year, or risk management for impacts from ports strikes and potential tariffs," said Steve Miller, Chair of the ISM Services Business Survey Committee.

He added, "There was general optimism expressed across many industries, but tariff concerns elicited the most panelist comments."

The report also said the new orders index crept up to 54.2 in December from 53.7 in November, while the employment index edged down to 51.4 in December from 51.5 in November but continued to indicate job growth in the service sector.

The supplier deliveries index jumped to 52.5 in December from 49.5 in November, with a reading above 50 indicating slower supplier delivery performance.

On the inflation front, the prices index surged to 64.4 in December from 58.2 in November, climbing above 60 for the first time since January 2024.

The Institute for Supply Management released a separate report last Friday showing manufacturing activity in the U.S. contracted at a slower rate in the month of December.

The ISM said its manufacturing PMI inched up to 49.3 in December from 48.4 in November, although a reading below 50 still indicates contraction. Economists had expected the index to come in unchanged.

With the unexpected increase, the manufacturing PMI reached its highest level since hitting 50.3 in March 2024.