Giant US services sector ends the year on a bright note
The US’s enormous services sector outperformed expectations in December, survey data has shown, finishing the year in a strong position compared to the country’s struggling manufacturers.
The closely-watched Institute for Supply Management (ISM) purchasing managers’ index (PMI) came in at 55 in December, up from a reading of 53.9 the previous month.
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The score was above economists expectations of 54.5 and indicated solid growth for the sector that dominates the US economy. It was the 119th consecutive month of expansion, ISM said.
ISM chair Anthony Nieves said the better-than-expected reading reflected optimism about the US and China striking a “phase one” trade deal.
Washington and Beijing have been locked in a rancorous trade war for over a year. Billions of dollars of goods have been tariffed, shaking business confidence in both countries.
Yet the world’s two biggest economies are due to sign a deal on 15 January that should lessen tensions for the time being and reduce some of the tariffs.
“The non-manufacturing sector had an uptick in growth in December,” Nieves said. “The respondents are positive about the potential resolution on tariffs.”
The upbeat end to the year in services starkly contrasts with the gloom hanging over the manufacturing sector.
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Last week, an ISM survey showed that US manufacturers were experiencing the deepest slump in more than a decade.
Timothy Fiore, head of ISM’s manufacturing surveys, said: “Global trade remains the most significant cross-industry issue, but there are signs that several industry sectors will improve as a result of the phase one trade agreement.”