Economic activity in the services sector grew in December for the 19th month in a row with the Services PMI® exceeding 60% for the 10th consecutive month, according to the Institute for Supply Management.
Every major component of the Services PMI declined, but ISM says the services sector is still growing because the readings are above 50%. The Services PMI registered 62%, 7.1 percentage points below November’s all-time high reading of 69.1%. The Business Activity Index registered 67.6%, a decrease of 7 percentage points compared to the reading of 74.6% in November, and the New Orders Index registered 61.5%, 8.2 percentage points lower than the all-time high reading of 69.7% reported in November.
The Supplier Deliveries Index registered 63.9%, 11.8 percentage points lower than the 75.7% reported in November. (Supplier Deliveries is the only ISM® Report On Business® index that is inversed; a reading of above 50 percent indicates slower deliveries, which is typical as the economy improves and customer demand increases.)
The Prices Index reached its third-highest reading ever at 82.5%, up 0.2 percentage point from November’s 82.3%. Services businesses continue to struggle replenishing inventories, as the Inventories Index (46.75, down 1.5 percentage points from November’s 48.2%) and the Inventory Sentiment Index (registered 38.3%, up 1.9 percentage points from November) stayed in contraction or ‘too low’ territory in December.