U.S. business activity growth in service sector slows in December

Data for December hinted that U.S. service sector’s business activity saw a solid but softer expansion. The headline Services Business Activity Index dropped to 53.7 in December from November’s 54.5. The latest index came in higher than the flash estimate of 52.4 and indicated a strong rise in business activity at U.S. service providers.

Several panel members implied that the upturn was because of greater client demand and increased new order volumes. But, the overall rate of activity growth was the softest since May and lower than the series trend. New business received by service providers continued to rise in December, although at a weaker rate than that seen in the earlier survey period. Anecdotal evidence attributed the rise in new orders to the acquisition of new clients and more favorable market conditions.

In the meantime, the level of outstanding business at service sector companies increased further in the month, with the pace of growth accelerating to reach a four-month high. Levels of employment also continued to rise in the month, as monitored companies recorded a strong pace of job creation.

Increased hiring was linked to greater capacity requirements and the upturn in new order volumes. However, workforce figures rose at the weakest rate since June. Inflationary pressures eased in December, with both input price and charge inflation weakening. Panelists linked the latest rise in cost burdens to increased fuel prices and staff salaries. Greater input costs were partially passed on to clients as companies noted that average charges also increased strongly. Although the pace of inflation weakened, it was above the series trend.

Business sentiment towards the future outlook was comparatively weak in December, with service providers recording the lowest level of optimism since September 2016. Panel members attributed positive expectations to greater client demand and more favorable market conditions.

At 20:00 GMT the FxWirePro's Hourly Strength Index of US Dollar was highly bearish at -127.967. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

FxWirePro launches Absolute Return Managed Program. For more details, visit http://www.fxwirepro.com/invest