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Services sector slows in December, factory orders rise

A worker carries out the final preparations on an engine for the Boeing 737-900 at their assembly operations in Renton, Washington, October
A worker carries out the final preparations on an engine for the Boeing 737-900 at their assembly operations in Renton, Washington, October

By Ryan Vlastelica

NEW YORK (Reuters) - Two measures of activity in the U.S. services sector showed slower growth in December, pointing to an economy that continues to expand at a modest pace, while factory orders rose in November.

The pace of growth in the U.S. services sector slowed for a second straight month in December with business activity expanding at a lower rate and new orders contracting, according to the Institute for Supply Management.

ISM's index fell to 53 last month from 53.9 in November, dropping to its lowest reading since June 2013 and under expectations for a read of 54.5.

Separately, financial data firm Markit said its services sector Purchasing Managers Index eased slightly from the prior month, slipping by 0.2 point to 55.7 in the month.

"We think the econony is on track and in recovery mode, and it isn't unusual to see periodic weak reports," said David Carter, chief investment officer at Lenox Wealth Advisors in New York. "ISM was a bit weak but the ongoing trend supports an ongoing recovery."

For both surveys, a reading above 50 indicates expansion. December marked the 48th straight month of growth in ISM's services index. In addition, ISM's employment gauge rose to 55.8 from 52.5 in November.

A separate report from the Commerce Department showed new orders for factory goods rebounded in November, rising 1.8 percent, as had been forecast.

The department also said orders for durable goods, manufactured products expected to last three years or more, rose 3.4 percent instead of the 3.5 percent increase reported last month. Durable goods orders excluding transportation rose 1.2 percent as previously reported.

(Reporting by Ryan Vlastelica; Editing by)

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