The Institute for Supply Management (ISM) announced on Thursday that its
Services PMI came in at 62.0 in December, down 7.1 percentage points compared
to November’s all-time high reading of 69.1 percent. The latest data pointed to the continuation of solid growth in
the services sector for the 19th month in a row, albeit the slowest in three
months.
Economists forecast the index to decrease to 66.9 in the final month of
2021. A reading above 50 signals expansion, while a reading below 50 indicates
contraction.
Of the 18 services industries, 16 reported expansion last month, the ISM noted, even
though ongoing challenges, including inflation, supply chain disruptions,
capacity constraints, logistical challenges, and shortages of labor and
materials, continued to impact overall business conditions.
According to the report, the ISM’s Production indicator for the services sector fell 7.0 percentage points to 67.6 percent from its November reading, while its
New Orders measure plunged 8.2 percentage points to 61.5 percent, and the
Supplier Deliveries gauge tumbled 11.8 percentage points to 63.9 percent. In
addition, ISM’s Backlog of Orders index declined 3.6 percentage points to 62.3
percent in December, its Employment gauge decreased 1.6 percentage points to 54.9
percent, and the Inventories indicator dropped 1.5 percentage points to 46.7
percent. At the same time, the Prices index edged up 0.2 percentage point to 82.5
percent, representing its third-highest reading ever.