MW: U.S. service firms post slowest growth in year and a half, ISM finds
Companies in the U.S. that offer services, such as retailers, real-estate firms and financial companies, grew again in December but at the slowest pace in a year and a half, a survey of senior executives showed.
The Institute for Supply Management said its non-manufacturing index fell to 55.3% from 55.9% in November. Readings over 50% signal more businesses are expanding instead of contracting, but that’s the lowest level since April 2014.
A similar ISM survey of manufacturers earlier this week, meanwhile, showed that heavy industry contracted in December for the second month in a row — the first time that’s happened since an economic recovery began in mid-2009.
The two ISM reports suggest the U.S. economy cooled off in the fourth quarter. Economists polled by MarketWatch predict that gross domestic product will expand about 1.9% in the final three months of the year, a touch slower than in the third quarter.
In December, service-oriented companies said new orders and production increased slightly, as did the number of people employed, but inventories and the backlog of orders fell more steeply.
The survey is compiled from a questionnaire of the executives who buy supplies for their companies and it tends to rise in fall in tandem with the broader economy.
