Markit Services PMI: Business Activity Growth Softens in December

The December US Services Purchasing Managers' Index conducted by Markit came in at 53.7 percent, down 0.8 from the final November estimate of 54.5. The consensus was for 55.9 percent. Markit's Services PMI is a diffusion index: A reading above 50 indicates expansion in the sector; below 50 indicates contraction.

Here is the opening from the latest press release:

December data signalled a solid, but softer expansion in business activity across the US service sector. Moreover, the latest upturn eased to a seven-month low. In line with the trend in output, the rate of growth in new business volumes softened slightly. Meanwhile, backlogs continued to rise and the latest expansion was the fastest for four months. Another solid rise in employment levels was linked to greater capacity pressures. On the price front, both input cost and charge inflation eased slightly. In line with softer business activity growth, the degree of optimism in the sector dipped to a 15-month low.

The seasonally adjusted final IHS Markit U.S. Services Business Activity Index registered 53.7 in December, down from 54.5 in November. The latest index was higher than the earlier ‘flash’ reading (52.4) and indicated a solid increase in business activity at US service providers. A number of panel members suggested the upturn was due to greater client demand and increased new order volumes. However, the overall rate of activity growth was the weakest since May and below the series trend. [Press Release]

Here is a snapshot of the series since mid-2012.