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ISM: U.S. Service Sector Growth Stalls in December

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Non-Manufacturing ISM Report On Business Unchanged From November

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A service sector employee sits at his desk. (Photo: REUTERS)

The Non-Manufacturing ISM Report On Business, the Institute for Supply Management gauge of service-sector growth, was unchanged in December at 57.2. Still, the reading topped the median economic forecast that was looking for a reading of 56.6.

Readings above 50 indicate expansion, while those below point to contraction.

“This represents continued growth in the non-manufacturing sector at the same rate,” said Anthony Nieves, chair of the Institute for Supply Management (ISM) Non-Manufacturing Business Survey Committee. “The Non-Manufacturing Business Activity Index decreased to 61.4%, 0.3 percentage point lower than the November reading of 61.7 percent, reflecting growth for the 89th consecutive month, at a slightly slower rate in December.”

The 12 non-manufacturing industries reporting growth in December — listed in order — are: Mining; Retail Trade; Finance & Insurance; Information; Arts, Entertainment & Recreation; Construction; Other Services; Health Care & Social Assistance; Professional, Scientific & Technical Services; Utilities; Transportation & Warehousing; and Accommodation & Food Services.

“The New Orders Index registered 61.6%, 4.6 percentage points higher than the reading of 57% in November,” Mr. Nieves added. The Employment Index decreased 4.4 percentage points in December to 53.8% from the November reading of 58.2%.”

The 3 industries reporting contraction in December are: Public Administration; Wholesale Trade; and Agriculture, Forestry, Fishing & Hunting.

The Prices Index increased 0.7 percentage point to 57%, up from the November reading of 56.3%. The slight gain indicated prices increased in December for the ninth consecutive month at a slightly faster rate.

ISM® NON-MANUFACTURING SURVEY RESULTS AT A GLANCE
COMPARISON OF ISM® NON-MANUFACTURING AND ISM® MANUFACTURING SURVEYS*
DECEMBER 2016
Non-Manufacturing Manufacturing
Index Series
Index
Dec
Series
Index
Nov
Percent
Point
Change
Direction Rate
of
Change
Trend**
(Months)
Series
Index
Dec
Series
Index
Nov
Percent
Point
Change
NMI®/PMI® 57.2 57.2 0.0 Growing Same 83 54.7 53.2 +1.5
Business Activity/Production 61.4 61.7 -0.3 Growing Slower 89 60.3 56.0 +4.3
New Orders 61.6 57.0 +4.6 Growing Faster 89 60.2 53.0 +7.2
Employment 53.8 58.2 -4.4 Growing Slower 7 53.1 52.3 +0.8
Supplier Deliveries 52.0 52.0 0.0 Slowing Same 12 52.9 55.7 -2.8
Inventories 52.0 51.5 +0.5 Growing Faster 4 47.0 49.0 -2.0
Prices 57.0 56.3 +0.7 Increasing Faster 9 65.5 54.5 +11.0
Backlog of Orders 48.0 51.0 -3.0 Contracting From Growing 1 49.0 49.0 0.0
New Export Orders 53.0 57.0 -4.0 Growing Slower 4 56.0 52.0 +4.0
Imports 50.0 54.0 -4.0 Unchanged From Growing 1 50.5 50.5 0.0
Inventory Sentiment 61.5 60.5 +1.0 Too High Faster 235 N/A N/A N/A
Customers’ Inventories N/A N/A N/A N/A N/A N/A 49.0 49.0 0.0
Overall Economy Growing Same 89
Non-Manufacturing Sector Growing Same 83

* Non-Manufacturing ISM® Report On Business® data is seasonally adjusted for Business Activity, New Orders, Prices and Employment Indexes. Manufacturing ISM® Report On Business® data is seasonally adjusted for New Orders, Production, Employment and Supplier Deliveries.

** Number of months moving in current direction.

The Non-Manufacturing ISM® Report On Business® is based on data compiled from purchasing and supply executives nationwide. Membership of the Non-Manufacturing Business Survey Committee is diversified by NAICS, based on each industry’s contribution to gross domestic product (GDP).

Written by
Staff Writing Group

PPD Business, the economy-reporting arm of People's Pundit Daily, is "making sense of current events." We are a no-holds barred, news reporting pundit of, by, and for the people.

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