US service sector expands at slower rate in December

AP News
Posted: Jan 05, 2018 12:07 PM
US service sector expands at slower rate in December

WASHINGTON (AP) — U.S. services companies expanded at a slower pace in December for the second straight month, a somewhat expected softening after robust growth in the fall.

The Institute for Supply Management said its services index slipped last month to 55.9 from 57.4 in November. Those months come on the heels of a 60.1 reading in October, which was the fastest pace of growth since August 2005. September's reading of 59.8 also was a 12-year high. Any reading above 50 signals expansion.

"It had to ease up a little bit, because that fast of growth couldn't be sustained for a long period of time," said Anthony Nieves, chair of the ISM non-manufacturing business survey committee.

The services sector has reported growth for 96 consecutive months, a positive sign for the overall U.S. economy.

"All indications are that 2018 will continue with growth," Nieves said.

The service sector accounts for more than 70 percent of U.S. jobs, so any indication of continued expansion likely means steady gains for the broader economy in the coming months.

Measures of business activity and new orders also fell last month, but they still remain in positive territory. The employment index rose by 1 percentage point, which could be attributed in part to holiday hiring.

There were 14 non-manufacturing sectors that reported growth in December, including retail trade, utilities, health care and real estate. The three sectors reporting contraction were information, educational services and management of companies.