The US services sector picked up steam in December, showing faster growth in employment and higher orders, the Institute for Supply Management said Friday.
The ISM’s nonmanufacturing index jumped to 56.1 percent from 54.7 percent in November, with companies reporting pick-ups in business conditions and consumer optimism.
The December increase was much better than analysts expected; the consensus estimate saw the index dropping to 53.5 percent.
It was the best growth since February, when the index stood at 57.3, before the services sector slumped to the year’s low in July of 52.1 percent.
December was the 36th straight month of growth in the massive services sector, which accounts for the lion’s share of US economic output. Fifty percent is the breakeven point between growth and contraction.
The ISM survey “is further evidence that the economy fared reasonably well in December. The improvement doesn’t alter our belief that growth will slow over the next few months but does reduce some of the downside risk,” said Ryan Sweet of Moody’s Analytics.
Of the 18 services industries ISM surveyed, 13 reported growth, led by information, construction and retail trade.
“Business has picked up significantly during this last quarter of the year,” said one executive in the transportation and warehousing industry.
An executive in the agriculture services sector said: “Preparing for substantial business due to heavier-than-normal crop forecast.”
The five industries reporting contraction included accommodation and food services, and professional, scientific and technical services.
The new orders sub-index increased by 1.2 points to 59.3 percent.
The ISM employment sub-index leaped six percentage points to 56.3 percent, showing growth “at a significantly faster rate,” said Anthony Nieves, chair of the ISM survey committee.
On Monday, the ISM published its monthly index on manufacturing activity, showing it expanded slightly in December after contracting the previous month.
A bright spot in the struggling manufacturing sector was the employment sub-index, which rose to 52.7 percent from 48.4 percent.
US services sector activity picks up: ISM
