(Kitco News) – The U.S. service sector strengthened last month with business activity improving and price pressures easing, while employment moved back into expansion, according to the latest data from the Institute for Supply Management (ISM).
The ISM announced on Wednesday morning that its Services Purchasing Managers Index rose to 54.4 in December, up from November’s reading of 52.6. The data was better than expected, as economists were looking for a reading of 52.3.
Readings above 50 in such diffusion indexes signify economic growth and vice versa. The farther an indicator is above or below 50, the greater or smaller the rate of change. In September, the Services PMI reading of 50 percent was at the breakeven point between expansion and contraction for the first time since January 2010.
“The Business Activity Index continued in expansion territory in December, registering 56 percent, 1.5 percentage points higher than the reading of 54.5 percent recorded in November,” said Steve Miller, chair of the Institute for Supply Management Services Business Survey Committee. “The New Orders Index also remained in expansion in December, with a reading of 57.9 percent, 5 percentage points above November’s figure of 52.9 percent. The Employment Index expanded for the first time in seven months with a reading of 52 percent, a 3.1-percentage point improvement from the 48.9 percent recorded in November — the fifth consecutive monthly increase since a reading of 46.4 percent in July.”
After setting a session low of $4,428.01 per ounce shortly after 8 am EST, gold prices continued to trade near the bottom edge of their daily range following the 10 am release. Spot gold last traded at $4,441.36 per ounce for a loss of 1.19% on the daily chart.
“The Supplier Deliveries Index registered 51.8 percent, 2.3 percentage points lower than the 54.1 percent recorded in November,” Miller wrote. “This is the 13th consecutive month that the index has been in expansion territory, indicating slower supplier delivery performance.”
Price pressures in the services sector continued to moderate last month, with the Prices Index coming in at 64.3 percent in December, its lowest level since a reading of 60.9 percent in March 2025. “The December figure was a 1.1-percentage point drop from November’s reading of 65.4 percent,” the report said. “The index has exceeded 60 percent for 13 straight months.”
“The Inventories Index registered 54.2 percent in December, an increase of 0.8 percentage point from November’s figure of 53.4 percent and in expansion territory for the second month in a row,” Miller noted. “The Inventory Sentiment Index expanded for the 32nd consecutive month, registering 54.1 percent, down 0.7 percentage point from November’s figure of 54.8 percent. The Backlog of Orders Index was in contraction territory for the 10th month in a row, registering 42.6 percent in December, a 6.5-percentage point decrease from the November figure of 49.1 percent.”
“Eleven industries reported growth in December, one fewer than in November, while the number reporting contraction remained at five,” he added. “The December Services PMI reading of 54.4 percent is 2.7 percentage points above the 12-month average of 51.7 percent. However, the 12-month average continues at its lowest level since August 2024 (51.7 percent) for the third month in a row; it’s also the second lowest since June 2010 (51.4 percent).”
“December’s Services PMI is a continuation of a downward trend (as noted in previous reports) of more than 10 percentage points in the 12-month average since February 2022, when it was 62.6 percent,” Miller noted. “In an encouraging sign, the PMI readings in November (52.6 percent) and December are in line with the same months in 2024 (November 52.5 percent; December 54 percent). Also, for the first time since February 2025, all four PMI subindexes are in expansion territory.”
