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Services PMI® at 50.6%; December 2023 Services ISM® Report On Business®Business Activity Index at 56.6%; New Orders Index at 52.8%; Employment Index at 43.3%; Supplier Deliveries Index at 49.5% TEMPE, Ariz., Jan. 5, 2024 /PRNewswire/ -- Economic activity in the services sector expanded in December for the 12th consecutive month as the Services PMI® registered 50.6 percent, say the nation's purchasing and supply executives in the latest Services ISM® Report On Business®. The sector has grown in 42 of the last 43 months, with the lone contraction in December 2022. The report was issued today by Anthony Nieves, CPSM, C.P.M., A.P.P., CFPM, Chair of the Institute for Supply Management® (ISM®) Services Business Survey Committee: "In December, the Services PMI® registered 50.6 percent, 2.1 percentage points lower than November's reading of 52.7 percent. The composite index indicated growth in December for the 12th consecutive month after a reading of 49.2 percent in December 2022, which was the first contraction since May 2020 (45.4 percent). The Business Activity Index registered 56.6 percent, a 1.5-percentage point increase compared to the reading of 55.1 percent in November. The New Orders Index expanded in December for the 12th consecutive month after contracting in December 2022 for the first time since May 2020; the figure of 52.8 percent is 2.7 percentage points lower than the November reading of 55.5 percent. "The Supplier Deliveries Index registered 49.5 percent, 0.1 percentage point below the 49.6 percent recorded in November. The index remained in contraction territory for the third consecutive month, indicating that supplier delivery performance was 'faster' in contrast to the 'slowing' status in September. In the last 11 months, the average reading of 48.3 percent (with a low of 45.8 in March) reflects the fastest supplier delivery performance since June 2009, when the index registered 46 percent. (Supplier Deliveries is the only ISM® Report On Business® index that is inversed; a reading of above 50 percent indicates slower deliveries, which is typical as the economy improves and customer demand increases.) "The Prices Index registered 57.4 percent in December, a 0.9-percentage point decrease from the November reading of 58.3 percent. The Inventories Index contracted in December, registering 49.6 percent, a decrease of 5.8 percentage points from November's figure of 55.4 percent. The Inventory Sentiment Index (55.3 percent, down 6.9 percentage points from November's reading of 62.2 percent) expanded for the eighth consecutive month. The Backlog of Orders Index contracted in December for the second consecutive month, registering 49.4 percent, a 0.3-percentage point increase compared to the November reading of 49.1 percent. "Nine industries reported growth in December. The Services PMI®, by being above 50 percent for the 12th month after a single month of contraction and a prior 30-month period of expansion, continues to indicate sustained growth for the sector, though at a slower rate in December." Nieves continues, "The services sector had a pullback in the rate of growth in December, attributed to the decrease in the rate of growth for new orders and contraction in employment. Respondents' comments vary by both company and industry. There are concerns related to economic uncertainty, geopolitical events and labor constraints." INDUSTRY PERFORMANCE WHAT RESPONDENTS ARE SAYING
Services ISM® Report On Business® data is seasonally adjusted for the Business Activity, New Orders, Employment and Prices indexes. Manufacturing ISM® Report On Business® data is seasonally adjusted for New Orders, Production, Employment and Inventories indexes. COMMODITIES REPORTED UP/DOWN IN PRICE, AND IN SHORT SUPPLY Commodities Up in Price Commodities Down in Price Commodities in Short Supply Note: The number of consecutive months the commodity is listed is indicated after each item. DECEMBER 2023 SERVICES INDEX SUMMARIES Services PMI® A Services PMI® above 49.9 percent, over time, generally indicates an expansion of the overall economy. Therefore, the December Services PMI® indicates the overall economy is growing for the 12th consecutive month after one month of contraction in December 2022. Nieves says, "The past relationship between the Services PMI® and the overall economy indicates that the Services PMI® for December (50.6 percent) corresponds to a 0.3-percent increase in real gross domestic product (GDP) on an annualized basis." SERVICES PMI® HISTORY
Business Activity The 12 industries reporting an increase in business activity for the month of December — listed in order — are: Agriculture, Forestry, Fishing & Hunting; Health Care & Social Assistance; Retail Trade; Accommodation & Food Services; Finance & Insurance; Transportation & Warehousing; Other Services; Mining; Utilities; Professional, Scientific & Technical Services; Public Administration; and Information. The five industries reporting a decrease in business activity for the month of December are: Real Estate, Rental & Leasing; Arts, Entertainment & Recreation; Construction; Management of Companies & Support Services; and Educational Services.
New Orders The nine industries reporting an increase in new orders for the month of December — listed in order — are: Agriculture, Forestry, Fishing & Hunting; Accommodation & Food Services; Transportation & Warehousing; Health Care & Social Assistance; Other Services; Management of Companies & Support Services; Finance & Insurance; Retail Trade; and Utilities. The six industries reporting a decrease in new orders for the month of December — listed in order — are: Real Estate, Rental & Leasing; Arts, Entertainment & Recreation; Mining; Educational Services; Construction; and Professional, Scientific & Technical Services.
Employment The seven industries reporting an increase in employment in December — listed in order — are: Agriculture, Forestry, Fishing & Hunting; Construction; Accommodation & Food Services; Health Care & Social Assistance; Professional, Scientific & Technical Services; Utilities; and Public Administration. The eight industries reporting a decrease in employment in December — listed in order — are: Real Estate, Rental & Leasing; Retail Trade; Information; Management of Companies & Support Services; Finance & Insurance; Wholesale Trade; Educational Services; and Transportation & Warehousing.
Supplier Deliveries The seven industries reporting slower deliveries in December — listed in order — are: Health Care & Social Assistance; Management of Companies & Support Services; Retail Trade; Transportation & Warehousing; Utilities; Professional, Scientific & Technical Services; and Public Administration. The four industries reporting faster supplier deliveries for the month of December are: Mining; Wholesale Trade; Construction; and Finance & Insurance. Seven industries reported no change in deliveries in December.
Inventories The seven industries reporting an increase in inventories in December — listed in order — are: Accommodation & Food Services; Transportation & Warehousing; Agriculture, Forestry, Fishing & Hunting; Retail Trade; Utilities; Health Care & Social Assistance; and Educational Services. The four industries reporting a decrease in inventories in December are: Mining; Construction; Wholesale Trade; and Public Administration. Seven industries reported no change in inventories in December.
Prices Eleven services industries reported an increase in prices paid during the month of December, in the following order: Retail Trade; Other Services; Health Care & Social Assistance; Construction; Educational Services; Public Administration; Wholesale Trade; Utilities; Professional, Scientific & Technical Services; Finance & Insurance; and Management of Companies & Support Services. The three industries reporting a decrease in prices for December are: Mining; Information; and Transportation & Warehousing.
NOTE: Commodities reported as up in price and down in price are listed in the commodities section of this report. Backlog of Orders The six industries reporting an increase in order backlogs in December — listed in order — are: Agriculture, Forestry, Fishing & Hunting; Finance & Insurance; Health Care & Social Assistance; Educational Services; Retail Trade; and Transportation & Warehousing. The five industries reporting a decrease in order backlogs in December are: Other Services; Management of Companies & Support Services; Wholesale Trade; Information; and Public Administration. Seven industries reported no change in backlogs in December.
New Export Orders The six industries reporting an increase in new export orders in December — listed in order — are: Accommodation & Food Services; Management of Companies & Support Services; Construction; Utilities; Wholesale Trade; and Professional, Scientific & Technical Services. The three industries reporting a decrease in new export orders in December are: Real Estate, Rental & Leasing; Transportation & Warehousing; and Information. Nine industries reported no change in new export orders in December.
Imports The only industry reporting an increase in imports for the month of December is Management of Companies & Support Services. The three industries reporting a decrease in imports in December are: Mining; Information; and Professional, Scientific & Technical Services. Fourteen industries reported no change in imports in December.
Inventory Sentiment The nine industries reporting sentiment that their inventories were too high in December — listed in order — are: Arts, Entertainment & Recreation; Other Services; Information; Mining; Agriculture, Forestry, Fishing & Hunting; Construction; Wholesale Trade; Utilities; and Health Care & Social Assistance. The two industries reporting a feeling that their inventories were too low in December are: Transportation & Warehousing; and Management of Companies & Support Services. Six industries reported no change in December.
About This Report The data presented herein is obtained from a survey of supply executives in the services sector based on information they have collected within their respective organizations. ISM® makes no representation, other than that stated within this release, regarding the individual company data collection procedures. The data should be compared to all other economic data sources when used in decision-making. Data and Method of Presentation Survey responses reflect the change, if any, in the current month compared to the previous month. For each of the indicators measured (Business Activity, New Orders, Backlog of Orders, New Export Orders, Inventory Change, Inventory Sentiment, Imports, Prices, Employment and Supplier Deliveries), this report shows the percentage reporting each response and the diffusion index. Responses represent raw data and are never changed. Data is seasonally adjusted for Business Activity, New Orders, Prices and Employment. All seasonal adjustment factors are subject annually to relatively minor changes when conditions warrant them. The remaining indexes have not indicated significant seasonality. The Services PMI® is a composite index based on the diffusion indexes for four of the indicators with equal weights: Business Activity (seasonally adjusted), New Orders (seasonally adjusted), Employment (seasonally adjusted) and Supplier Deliveries. Diffusion indexes have the properties of leading indicators and are convenient summary measures showing the prevailing direction of change and the scope of change. An index reading above 50 percent indicates that the services economy is generally expanding; below 50 percent indicates that it is generally declining. Supplier Deliveries is an exception. A Supplier Deliveries Index above 50 percent indicates slower deliveries and below 50 percent indicates faster deliveries. A Services PMI® above 49.9 percent, over time, indicates that the overall economy, or gross domestic product (GDP), is generally expanding; below 49.9 percent, it is generally declining. The distance from 50 percent or 49.9 percent is indicative of the strength of the expansion or decline. The Services ISM® Report On Business® survey is sent out to Services Business Survey Committee respondents the first part of each month. Respondents are asked to ONLY report on U.S. operations for the current month. ISM® receives survey responses throughout most of any given month, with the majority of respondents generally waiting until late in the month to submit responses to give the most accurate picture of current business activity. ISM® then compiles the report for release on the third business day of the following month. The industries reporting growth, as indicated in the Services ISM® Report On Business® monthly report, are listed in the order of most growth to least growth. For the industries reporting contraction or decreases, those are listed in the order of the highest level of contraction/decrease to the least level of contraction/decrease. ISM ROB Content Except as explicitly and expressly permitted by ISM, you are strictly prohibited from creating works or materials (including, but not limited to: tables, charts, data streams, time-series variables, fonts, icons, link buttons, wallpaper, desktop themes, online postcards, montages, mashups and similar videos, greeting cards, and unlicensed merchandise) that derive from or are based on the ISM ROB Content. This prohibition applies regardless of whether the derivative works or materials are sold, bartered, or given away. 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Elliot Road, Suite 113, Tempe, AZ 85284-1556, or by emailing [email protected]; subject: Content Request. ISM shall not have any liability, duty, or obligation for or relating to the ISM ROB Content or other information contained herein, any errors, inaccuracies, omissions or delays in providing any ISM ROB Content, or for any actions taken in reliance thereon. In no event shall ISM be liable for any special, incidental, or consequential damages, arising out of the use of the ISM ROB. Report On Business®, Manufacturing PMI®, Services PMI®, and Hospital PMI® are registered trademarks of Institute for Supply Management®. Institute for Supply Management® and ISM® are registered trademarks of Institute for Supply Management, Inc. About Institute for Supply Management® The full text version of the Services ISM® Report On Business® is posted on ISM®'s website at www.ismrob.org on the third business day* of every month after 10:00 a.m. ET. The one exception is in January, the report is released on the fourth business day of the month. The next Services ISM® Report On Business® featuring January 2024 data will be released at 10:00 a.m. ET on Monday, February 5, 2024. *Unless the New York Stock Exchange is closed.
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