The Institute for Supply Management (ISM) services index stood at 50.6% in December, 2.1 percentage points below November, according to the report.
The December data marked the twelfth consecutive month in which the ISM services index was above the 50-point threshold, taken as a floor to determine the sector’s growth.
With the exception of December 2022, the services sector has resisted in 42 of the last 43 months, despite high prices because many of these services are essential for the population.
This contrasts sharply with the manufacturing sector, in a historic contraction for 14 months, according to ISM.
“The services sector had a decline in the growth rate in December, attributed to the decrease in the growth rate of new orders and the contraction of employment,” the report’s director, Anthony Nieves, said in a statement.
Uncertainty
It added that respondents expressed concerns “related to economic uncertainty, geopolitical developments and labor constraints.”
Nine service industries reported weak growth in December, including those linked to agriculture and retail trade, as well as health care and social assistance.
Nine others experienced declines, including real estate, arts, entertainment and mining.
“The ISM services index deteriorated in December, falling to the lowest level since May,” High Frequency Economics chief economist Rubeela Farooqi wrote in a note to clients.
Nationwide economist Oren Klachkin added: “The services sector was the main driver of growth in the US economy last year, however it lost momentum in late 2023 and we expect weaker conditions ahead.”
Source: With information from AFP.
