ISM PMI: The US economy has lost some traction

 
Chris Papadopoullos
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Despite the overall fall in the PMI, there were a few bright spots (Source: Getty)

The US economy slowed in December, according to a survey of businesses published today.

The Institute for Supply Management's purchasing managers' index dropped to a score of 55.3 for last month from 55.9 in November. Scores above 50 indicate growth, with last month's lower score indicator slower growth.

The survey was for the non-manufacturing sectors, which make up over 80 per cent of the economy.

Despite the drop, respondents were upbeat on their prospects. New orders increased, as did the rate of hiring and general business activity. Weighing on the survey were inventories and prices.

Combined with ISM's survey of the manufacturing sector, which indicated the sector was still contracting, it suggests the economy as a whole slowed in December.

The non-manufacturing sectors include retail, real estate, health care, transport, construction and a range of other professional services.

Economist Ian Shepherdson from Pantheon Macroeconomics said the figures were "nothing to worry about". He added:

The headline index tends to track the rate of growth of real core retail sales in the short-term, and this dip is consistent with the latest sales numbers. We expect no further decline. The details are better than the headline, with new orders rising 0.7 points to 58.2 and business activity up 0.5 points to 58.7. The key employment sub-index rose marginally too, to 55.7 from 55.0.

A separate survey compiled by Markit also showed growth in the service sector easing. Markit's survey revealed growth was at its lowest for 11 months.

Official figures published today showed that exports fell 0.9 per cent month-on-month in November while imports dipped 1.7 per cent, suggesting sluggish demand at home and abroad.

The US commerce department also said that orders for US factory goods fell in November by 0.2 per cent compared with the previous month.

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