The Institute
for Supply Management (ISM) reported on Tuesday that its Services PMI came in
at 54.1 per cent in December 2024, registering a gain of 2.0 percentage points
from an unrevised November 2024
reading of 52.1 per cent.
The latest figure indicated that economic activity in the U.S. services sector grew
for the sixth successive month in December and at a quicker pace than in the previous month.
Economists had expected
the indicator to jump to 53.3 in December.
A reading above
50 signals expansion, while a reading below 50 indicates contraction.
According to
the report, the Production index jumped by 4.5 percentage points to 58.2 per
cent last month,
suggesting the sixth month of growth in production across the services sector. In
addition, the New Orders gauge increased by 0.5 percentage point to 54.2 per
cent, indicating new orders rose for the sixth consecutive month. Meanwhile, the
Employment measure slipped by 0.1 percentage point to 51.4 per cent, implying employment
activity in the services sector expanded in December for the third straight
month. Elsewhere, the Supplier Deliveries indicator jumped by 3.0 percentage
points to 52.5 per cent, returning in expansion territory after a one-month contraction
and indicating slower supplier performance. The Inventories indicator surged by
3.5 percentage points to 49.4 per cent but remained in contraction territory for
the second month in a row. On the price front, the Prices index soared 6.2 percentage
points to 64.4 per cent, indicating that prices paid by services organizations for materials and
services grew in December for the 91st month running.
Commenting on
the data, Steve Miller, Chair of the Institute for Supply Management (ISM)
Services Business Survey Committee, noted that 9 industries reported business
activity growth in December, five fewer than the previous month's total. "Many
industries noted that end-of-year and seasonal factors were helping drive
business activity or impact inventory management," he added. "Some of the
increased business activity seems to have been driven by preparation for demand
in the new year, or risk management for impacts from ports strikes and
potential tariffs. There was general optimism expressed across many industries,
but tariff concerns elicited the most panelist comments."