The ISM Services Index rose by 2.0 percentage points (points) to 54.1%.
“Nine industries reported growth in December, five fewer than the previous month’s total. The Services PMI® has expanded in 22 of the last 24 months dating back to January 2023, and the December reading is the third highest of 2024.” “The Services PMI in December was boosted primarily by strength in the Business Activity and Supplier Deliveries indexes. Many industries noted that end-of-year and seasonal factors were helping drive business activity or impact inventory management. 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.” said Steve Miller, CPSM, CSCP, Chair of the Institute for Supply Management® (ISM®) Services Business Survey Committee.
The Business Activity Index registered 58.2% in December, 4.5 points higher than the 53.7% recorded in November, indicating a sixth month of expansion after contracting in June for the first time since May 2020. The Supplier Deliveries Index registered 52.5%, 3.0 percentage points higher than the 49.5% recorded in November. (A reading of below 50% indicates faster deliveries). The Prices Index registered 58.2% in November, a 0.1-point increase from October’s reading of 58.1%. Respondents commented: “Overall activity slightly higher than planned.” (Retail Trade).
The Inventories Index landed in contraction territory for the second month in a row. The reading of 49.4% is a 3.5-percentage point increase compared to the 45.9% reported in November. Employment Index remained in expansion territory for the fifth time in six months; the reading of 51.4% is a 0.1-percentage point decrease compared to the 51.5% recorded in November. Respondents commented: “Inflation levels seem to be increasing, thus dimming hopes of interest rate cuts.” (Professional, Scientific & Technical Services).
The Inventory Sentiment Index grew for the 20th consecutive month in December after one month of contraction in April 2023. The index registered 53.4%, a decrease of 1.2-percentage points from November’s figure of 54.6%. This reading indicates that respondents feel their inventories are too high when correlated to industry levels.
