January 6, 2014, 11:11 AM ET
Vital Signs: Demand for Services Stumbles
By Kathleen Madigan
The nonmanufacturing sector unexpectedly downshifted in December, according to the Institute for Supply Management. The big worry is a sharp falloff in demand.
The ISM’s non-manufacturing purchasing management index slowed to 53.0 in December from 53.9 in November, in contrast to the acceleration to 54.4 expected by economists. Comments by respondents suggested the weather and holidays may have contributed to some year-end softness.
The details in the report that covers mainly services raise some concern. Specifically, the new orders index continues to weaken since hitting a robust 60.5 in August. The December index dropped to 49.4 from 56.4 in November. The ISM said it was the first contractionary reading since July 2009.
The backlog of orders also deteriorated, suggesting pent-up demand for non-manufacturing products is dwindling.
The report did show an acceleration in jobs, with the employment index bouncing back to 55.8 after it dropped to 52.5 from 56.2 in October. If order books do not fill up again, however, the employment index could slow in early 2014.
The ISM’s non-manufacturing purchasing management index slowed to 53.0 in December from 53.9 in November, in contrast to the acceleration to 54.4 expected by economists. Comments by respondents suggested the weather and holidays may have contributed to some year-end softness.
The details in the report that covers mainly services raise some concern. Specifically, the new orders index continues to weaken since hitting a robust 60.5 in August. The December index dropped to 49.4 from 56.4 in November. The ISM said it was the first contractionary reading since July 2009.
The backlog of orders also deteriorated, suggesting pent-up demand for non-manufacturing products is dwindling.
The report did show an acceleration in jobs, with the employment index bouncing back to 55.8 after it dropped to 52.5 from 56.2 in October. If order books do not fill up again, however, the employment index could slow in early 2014.
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