Source: Economics Group of Wells Fargo Bank, N.A.
Summary
Activity snapped back into action in the service sector in December as ISM services climbed to 54.1. Most sub-components notched gains, but none rivaled the 6.2 point jump in the prices paid component, which signaled the broadest increase in service sector costs since February 2023.
Continued Services Activity Complicates Fed Path for Lower Rates
After a slowing in service sector activity in November, the ISM services index signaled a snapback in December with three out of the four components that feed into the headline index rising, and all four remaining in expansion territory (chart). Business activity at 58.2 reflects a 4.5 point jump from November, and the gain in new orders was only 0.5 points but that was enough to put this forward-looking measure at 54.2 in December (chart). Wait times are growing again with supplier deliveries now at 52.5, a 3.0 point jump from November.
Only employment was lower, but that measure remains in expansion at 51.4. Respondent comments highlight the differences across industries when it comes to hiring plans ranging from “Staging for future growth” to “Hiring freeze.”