Soaring US services clouds the Fed rate cut story

Economic activity in the services sector continued to expand in December, say the nation's purchasing and supply executives in the latest ISM® Services PMI® Report. The Services PMI® registered at 54.4 percent, finishing 2025 on a positive note with its 10th month in expansion territory — and its highest reading — of the year. The report was issued today by Steve Miller, CPSM, CSCP, Chair of the Institute for Supply Management® (ISM®) Services Business Survey Committee: "In December, the Services PMI® registered a reading of 54.4 percent, 1.8 percentage points higher than the November figure of 52.6 percent and a third consecutive month of expansion. The Business Activity Index continued in expansion territory in December, registering 56 percent, 1.5 percentage points higher than the reading of 54.5 percent recorded in November. The New Orders Index also remained in expansion in December, with a reading of 57.9 percent, 5 percentage points above November's figure of 52.9 percent. The Employment Index expanded for the first time in seven months with a reading of 52 percent, a 3.1-percentage point improvement from the 48.9 percent recorded in November — the fifth consecutive monthly increase since a reading of 46.4 percent in July. US Price Paid: 64.3 (est 64.9; prev 65.4) - New Orders: 57.9 (est 52.6; prev 52.9) - Employment: 52.0 (est 49.0; prev 48.9) ISM: US services activity improves in December The United States' service sector activity continued to grow in December, the Institute for Supply Management (ISM) shared on Wednesday. The Services Purchasing Managers' Index (PMI) rose to 54.4% in the reported month, from November's 52.6%, "finishing 2025 on a positive note with its 10th month in expansion territory." Meanwhile, the New Orders Index jumped 5 percentage points compared to the previous month, to stand at 57.9%. The Business Activity Index was 1.5 percentage points higher on a monthly level, reaching 56%. Month on month, the Employment Index improved by 3.1 percentage points, coming in at 52 and finally entering the expansion territory. "December's Services PMI is a continuation of a downward trend (as noted in previous reports) of more than 10 percentage points in the 12-month average since February 2022, when it was 62.6 percent. In an encouraging sign, the PMI readings in November and December are in line with the same months in 2024 (November 52.5 percent; December 54 percent)," Chair of the ISM Services Business Survey Committee Steve Miller said.