Economic Buzz: US Service Sector Activity Slows Slightly In December

6 Jan 2022 , 08:45 AM

US services providers registered another steep expansion in business activity at the end of 2021, according to the latest PMI data. The upturn eased slightly to the slowest for three months, but was supported by a sharper increase in new business. The rise in new orders was the fastest for five months, as demand conditions strengthened. Although firms sought to expand workforce numbers to tackle strong growth in backlogs of work, labor shortages and challenges retaining staff hampered progress, with employment rising only marginally. Nevertheless, hopes of further upticks in demand drove business confidence to the highest since November 2020.

The seasonally adjusted final IHS Markit US Services PMI Business Activity Index registered 57.6 in December, down from 58.0 in November, but broadly in line with the earlier released flash estimate of 57.5. The latest data signalled a sharp upturn in service sector business activity, despite the pace of growth easing to a three-month low. The expansion was driven by stronger client demand, according to survey respondents. The Composite PMI Output Index posted 57.0 in December, down slightly from 57.2 in November. The latest data signalled a steep increase in private sector business activity, albeit largely driven by the service sector as manufacturing production rose at a relatively muted pace.

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