US ISM Services PMI declines to 50.6 in December vs. 52.6 expected

• US ISM Services PMI for December came in below the market expectation.
• US Dollar Index stays deep in negative territory near 102.00.

Business activity in the US service sector continued to expand in December, albeit at a softer pace than November, with the ISM Services PMI declining to 50.6 from 52.7. This reading came in below the market expectation of 52.6.

Further details of the survey showed that the Prices Paid Index, the inflation component, edged slightly lower to 57.4 from 58.3, while the Employment Index dropped sharply to 43.3 from 50.7. Finally, the New Orders Index retreated to 52.8 from 55.5.

Commenting on the data, “the services sector had a slight uptick in growth in November, attributed to the increase in business activity and slight employment growth,” said Anthony Nieves, Chair of the Institute for Supply Management (ISM) Services Business Survey Committee. “Respondents’ comments vary by both company and industry. There is continuing concern about inflation, interest rates and geopolitical events. Rising labor costs and labor constraints remain employment-related challenges.”

Market reaction

The US Dollar Index continued to push lower after this data and was last seen losing 0.4% on the day at 102.00.