By Robb M. Stewart


U.S. service-sector activity lost momentum in December, contracting after 30 consecutive months of growth.

The Institute for Supply Management said Friday its index of services activity fell to 49.6 in December from 56.5 in November and below the reading of 55.1 expected by economists polled by The Wall Street Journal.

The index, which is based on a survey of services providers across the U.S., suggests activity in the sector is now contracting for the first time since May 2020 when the index registered 45.2. The 50 threshold separates expansion from contraction.

"Prior to the current contraction in the services sector, the PMI indicated growth for all but two of the previous 154 months, including a faster rate of expansion in November," said Anthony Nieves, chairman of the ISM services business survey committee.

On Wednesday, data from a similar survey of manufacturers showed that factory activity contracted further in December as demand for goods continued to decline amid the rise in interest rates. The index of U.S. manufacturing activity fell to 48.4 for the month from 49.0 the month before.

The business activity index showed weakened growth, at 54.7 in December from 64.7 the month before, with 11 industries surveyed reporting an increase in activity for the latest month and four reporting a decrease.

New orders and jobs both contracted for the month, with the new order index falling to 45.2 from 56.0 and the employment index dropping to 49.8 after growing the month before to 51.5. Mr. Nieves said the contraction in employment was due to a combination of decreased hiring amid economic uncertainty and an inability to fill open positions.

The index for supplier deliveries moved to 48.5 from 53.8, indicating faster performance. A reading above 50 indicates faster deliveries, which is typical of an improving economy and increases in customer demand.

Inflation pressures eased somewhat but to still pointed to elevated price increases, with the prices index declining to 67.6 from 70.0.


Write to Robb M. Stewart at robb.stewart@wsj.com


(END) Dow Jones Newswires

01-06-23 1049ET