The Institute for Supply Management released a report on Wednesday showing an unexpected increase by its reading on U.S. service sector activity in the month of December.
The ISM said its services PMI climbed to 54.4 in December from 52.6 in November, with a reading above 50 indicating growth. Economists had expected the index to edge down to 52.3.
With the unexpected increase, the services PMI reached its highest level since hitting 56.0 in October 2024.
“The December Services PMI reading of 54.4 percent is 2.7 percentage points above the 12-month average of 51.7 percent,” said Steve Miller, Chair of the ISM Services Business Survey Committee.
He added, “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).”
The unexpected increase by the headline index partly reflected notably faster growth in new orders, as the new orders index surged to 57.9 in December from 52.9 in November.
The employment index also jumped to 52.0 in December from 48.9 in November, suggesting the first increase in service sector employment in seven months.
The ISM said the business activity index also climbed to 56.0 in December from 54.5 in November, reaching its highest level in a year.
On the inflation front, the prices index fell to a nine-month low of 64.3 in December from 65.4 in November but remained above 60 for the thirteenth straight month.
A separate report released by the ISM on Monday showed its reading on U.S. manufacturing activity unexpectedly decreased in the month of December.
The ISM said its manufacturing PMI edged down to 47.9 in December after slipping to 48.2 in November, with a reading below 50 indicating contraction. Economists had expected the index to inch up to 48.3.
With the unexpected decrease, the manufacturing PMI dropped to its lowest reading since October 2024.
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