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Economy in Brief

U.S. ISM Services Index Falls Sharply in December
by Tom Moeller  January 6, 2022

• Total services index sets new record in 2021.

• Business activity, new orders and delivery speeds post sharp monthly declines.

• Price index remains strong.

The ISM Index of Services Activity fell sharply during December to 62.0 from the record 69.1 in November. During all of 2021, the index advanced to a record 62.5 from 54.3 in 2020. The Action Economics Forecast Survey had expected 67.0 for December. Haver Analytics constructs a composite index combining the services index and the manufacturing reading. This index strengthened to 61.6 in December from 68.2 in November and also was a record 62.3 for all of last year. These series date back to July 1997.

In the latest services survey, the business activity reading weakened to 67.6 from the record 74.6 in November. The new orders index also fell sharply to 61.5 from 69.7. A lessened 30.8% of respondents reported more orders while an increased 14.7% reported a decline. The employment measure fell to 54.9 from 56.5. A raised 30.1% of respondents indicated higher employment and an increased 22.0% reported it lower. The percentage indicating that employment held steady fell sharply to 47.9% of respondents. The supplier delivery index (NSA) dropped sharply to 63.9 in December from 75.7 in November. A greatly increased 8.6% of respondents reported faster delivery speeds while a reduced reported slower, the least since April.

The prices index was fairly steady at 82.5 after falling from a near-record 82.9 in October. A lessened 57.4% of respondents reported price increases versus 63.0% in November, while 1.5% reported price declines. A higher 41.1% reported stable prices.

The export orders series rose to 61.5 and reversed most of its decline to 57.9 in November. The record 65.8 was reached in July. The imports index rose to 55.5 in December from 50.5 in November. The order backlog measure declined sharply to 62.3, a three-month low, while the inventory change index eased to 46.7 from 48.2. These series are not seasonally adjusted and are not included in the nonmanufacturing composite total.

The ISM figures are available in Haver's USECON database, with additional detail in the SURVEYS database. The expectations figure from Action Economics is in the AS1REPNA database.

ISM Services Survey (SA) Dec Nov Oct Dec '20 2021 2020 2019
Services PMI 62.0 69.1 66.7 57.7 62.5 54.3 55.5
   Business Activity 67.6 74.6 69.8 60.5 64.6 55.8 58.0
   New Orders 61.5 69.7 69.7 58.6 63.5 55.6 57.6
   Employment 54.9 56.5 51.6 48.7 54.3 46.0 55.0
   Supplier Deliveries (NSA) 63.9 75.7 75.7 62.8 67.5 59.7 51.5
Prices Index 82.5 82.3 82.9 64.4 77.5 58.6 57.5
ISM Mfg. & Services (Haver Composite) 61.6 68.2 66.0 58.0 62.3 54.1 55.0
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