Ser­vice sec­tor strength in US weak­ens

Yorkshire Post - Business - - BUSINESS / MARKET REPORT -

US ser­vices sec­tor ac­tiv­ity slowed to a five-month low in De­cem­ber, but re­mained above a level con­sis­tent with solid eco­nomic growth in the fourth quar­ter.

The In­sti­tute for Sup­ply Man­age­ment said on Mon­day its non-man­u­fac­tur­ing ac­tiv­ity in­dex fell to 57.6 last month, the low­est read­ing since July, from 60.7 in Novem­ber.

Still the in­dex stayed well above the 50 mark, sug­gest­ing ex­pan­sion of the vast ser­vices sec­tor. An­a­lysts polled by Reuters had fore­cast a read­ing of 59.0.

Econ­o­mists said while the drop in the ser­vices in­dus­tries mea­sure echoed re­cent de­clines in other busi­ness sur­veys, the read­ing was still strong by his­toric stan­dards.

“We have seen a range of dif­fer­ent indi­ca­tors lately that point to some soft­en­ing in the econ­omy as well as ris­ing re­ces­sion risks, but we think that the econ­omy will con­tinue to ex­pand at a de­cent pace de­spite some mod­er­a­tion in growth,” said Daniel Sil­ver, an econ­o­mist at JPMorgan in New York.

Growth es­ti­mates for the fourth quar­ter are around a 2.6 per­cent an­nu­alised rate. The econ­omy grew at a 3.4 per cent pace in the third quar­ter.

The dol­lar fell against a bas­ket of cur­ren­cies, pres­sured by grow­ing ex­pec­ta­tions the Fed­eral Re­serve will ei­ther pause or halt its in­ter­est rate hike cy­cle.

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