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News : US Economy Last Updated: Jan 6, 2014 - 4:12 PM

US and UK services PMI surveys show slight easing of activity in December
By Finfacts Team
Jan 6, 2014 - 4:08 PM

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US services PMI (purchasing managers' index) grew in December for the 48th consecutive month, say the nation's purchasing and supply executives in the latest Non-Manufacturing ISM Report On Business. Meanwhile, the UK service sector continued to expand strongly as 2013 came to an end, with activity, new business and employment all again rising at marked rates. Markit said these positive trends helped bolster business expectations, with confidence amongst service providers at its highest in nearly four years, even though activity slightly eased in the month.

Anthony Nieves, chair of the US Institute for Supply Management Non-Manufacturing Business Survey Committee said today: "The NMI registered 53% in December, 0.9 percentage point lower than November's reading of 53.9%. This indicates continued growth at a slightly slower rate in the non-manufacturing sector. The Non-Manufacturing Business Activity Index fell to 55.2%, which is 0.3 percentage point lower than the 55.5% reported in November, reflecting growth for the 53rd consecutive month, but at a slightly slower rate. The New Orders Index contracted after 52 consecutive months of growth for the first time since July 2009, when it registered 48%. The index decreased significantly by 7 percentage points to 49.4 percent, and the Employment Index increased 3.3 percentage points to 55.8 percent, indicating growth in employment for the 17th consecutive month and at a faster rate.

The Prices Index increased 2.9 percentage points to 55.1%, indicating prices rose at a faster rate in December when compared to November. According to the NMI, eight non-manufacturing industries reported growth in December. Despite the substantial decrease in the New Orders Index, respondents' comments predominately reflect that business conditions are stable."

The eight non-manufacturing industries reporting growth in December - - listed in order - - are: Management of Companies & Support Services; Retail Trade; Other Services; Finance & Insurance; Public Administration; Construction; Information; and Health Care & Social Assistance. The eight industries reporting contraction in December - - listed in order - - are: Mining; Arts, Entertainment & Recreation; Educational Services; Transportation & Warehousing; Real Estate, Rental & Leasing; Utilities; Wholesale Trade; and Accommodation & Food Services.

A separate survey of US firms by Markit found that activity at service providers in the US continued to rise at a solid pace in December. This was signalled by the final Markit US Services PMI Business Activity Index posting 55.7, down slightly from November’s 55.9 and below the earlier flash reading of 56.0.

Service companies were optimistic towards the one-year business outlook, with almost 59% of surveyed firms expecting activity to be higher. Planned new product launches and improving economic conditions were expected to support future growth. Overall, the level of positive sentiment was marked and sharply higher than November’s 12-month low.

The UK service sector continued to expand strongly as 2013 came to an end, with activity, new business and employment all again rising at marked rates. These positive trends helped bolster business expectations, with confidence amongst service providers at its highest in nearly four years.  After accounting for seasonal factors, the headline Business Activity Index registered a level of 58.8. That was down from 60.0 in November and a six-month low, but nonetheless signalled a historically strong rate of expansion.

Chris Williamson, Markit chief economist, said on the UK survey: "“What’s also very encouraging is that this is a broad-based upturn, even within services, which adds to the sustainability of the recovery. The strongest expansions in the fourth quarter were seen in computing and IT, transport & communication, financial services and business to business services, all of which saw very similar strong rates of growth.

“The weakest sectors were hotels and restaurants and personal services. While these household-facing sectors have nevertheless seen decent growth, their underperformance is another reminder that this is not purely a consumer and housing driven boom that we are currently seeing.”

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