The non-manufacturing industry general business index released by the Institute for Supply Management (ISM) in December last year showed a decline, indicating that activity had almost stagnated. Employment indicators showed the sharpest contraction in activity in nearly three years.
Key Point
- The non-manufacturing industry general business conditions index decreased by 2.1 points from the previous month to 50.6.
- The decline is the largest since March last year.
- This was the second lowest figure in 2023 overall.
- It fell below all economist expectations.
- Median prediction is 52.5
- Last month was 52.7
- An index of 50 indicates the boundary between expansion and contraction of activity.
The employment index dropped significantly by 7.4 points to 43.3, the lowest level since July 2020.
If the slowdown in the service industry continues, there could be growing concerns that activity in the U.S. economy as a whole will slow down. The December comprehensive manufacturing industry index released by ISM on the 3rd remained in the contraction zone for 14 consecutive months.
U.S. ISM Manufacturing Industry Composite Business Conditions Index continues to decline for 14 consecutive months – Orders soften (2)
“There are widespread concerns related to economic uncertainty, geopolitical events and workforce constraints,” Anthony Nieves, chairman of the ISM Non-Manufacturing Business Review Committee, said in a statement.
“Overall, the service industry should continue its growth trajectory in 2024,” Nieves said in a conference call with reporters.
Looking at other components of the index, the index for new orders fell to its lowest level in three months, suggesting a deterioration in the demand outlook.
Nine industries showed expansion in activity in December, including accommodation and food services, healthcare, and transportation and warehousing. However, nine industries also showed a reduction in activity. Real estate and entertainment/recreation were particularly weak.
The Business Conditions Index, which corresponds to production in the ISM Manufacturing Index, showed an accelerating pace of expansion in activity.
The inventory business confidence index fell nearly 7 points. It had risen significantly in November. The inventory change index fell below 50, suggesting that traders believe the supply-demand balance is improving.
The purchase price index fell to 57.4, the lowest level in five months. This signaled a slowdown in the pace of cost increases.
See table for detailed statistics.
news-rsf-original-reference paywall">Original title: Dec. US ISM Services Falls to 50.6, Below All Estimates (excerpt)
US Services Growth Slows as Employment Shrinks Most Since 2020
(Adds and updates the index breakdown and comments from the publisher)
2024-01-05 15:05:00
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