U.S. service companies expanded at a steady but slightly slower pace for the second consecutive month in December, as sales fell slightly and new orders plunged to a 4-year low, an industry group reported Monday, indicating that growth in the massive sector may remain modest in the coming months.
The Institute for Supply Management (ISM) said its service-sector index fell to 53 last month from 53.9 in November. It was the lowest reading since June 2013 and was in contrast to economist expectations for an increase to 54.5. In the ISM survey, any reading above 50 reflects expansion in the sector, while a reading below 50 indicates contraction.
Despite services activity slowing, December marked the 48th consecutive month of growth in the sector, which covers businesses that employ 90 percent of U.S. workers, including retail, construction, healthcare, and financial services.
According to the report, business activity fell to 55.2 last month from 55.5, the weakest reading for the subindex since September. The measure of new orders plunged 7 points to 49.4, the first time it has moved below 50 since July 2009. But a gauge of hiring increased 3.3 points to 55.8, evidence that services firms are adding more jobs.