A person shops at a Whole Foods Market grocery store on December 17, 2024 in New York City.
Spencer Platt getty images
Activity in the US services industry accelerated in December, but with it came a sharp increase in expectations of price hikes as businesses grew concerned about the impact of tariffs on inflation.
Service Index of Supply Management Institute A reading of 54.1% was recorded on Tuesday, representing the share of businesses expecting growth. That was up 2 percentage points from November and better than a Dow Jones survey of economists, which showed a consensus forecast of 53.4%.
With better overall readings, the price index rose 6.2 points or more than 10% to 64.4%. Steve Miller, chair of the ISM’s Business Survey Committee, said it was the first time the index has surpassed 60% since January 2024. The price index reached its highest level since February 2023.
“General optimism was expressed across many industries, but most panelist comments came from tariff concerns,” Miller said.
presidential election Donald Trump Has vowed to impose sweeping tariffs after taking office later this month. Trump on Monday Denied a report by the Washington Post He was considering a narrower, more targeted approach.
ism manufacturing survey Higher prices for the month were also reflected, with the index rising 2.2 points on the month to 52.5%.
Treasury yields, particularly at the longer end of the curve, moved higher following the release. The benchmark 10-year note yielded 4.68%, up 0.065 percentage points or 6.5 basis points on the recent session.
10 year yield
In the Services survey, many respondents cited tariffs as a concern, noting the generally positive business climate through 2024.
A respondent in the transportation and warehousing industry said, “It seems there is a lot of uncertainty about tariffs and purchasing decisions. A lot of waiting and seeing will happen.”
An information services industry manager said, “There is general optimism that the incoming administration will have a positive impact on regulatory, tax and energy policies that will lead to economic recovery. We are concerned about tariff activity and hoping for the best.” Are.”
The business activity index also increased by 4.5 points to 58.2%.
Employment was little changed at 51.4%; In the ISM manufacturing survey, the index fell by 2.8 points to 45.3%. Any reading below 50% in the ISM survey represents a contraction.
Readings on inflation and employment conditions are important for the Federal Reserve as it considers future steps in monetary policy. The central bank cut its benchmark lending rate by a full percentage point from September to December in 2024, but is now expected to move at a more cautious pace when evaluating incoming economic data.
A separate report on Tuesday indicated that job openings increased in November while fewer workers left their jobs.
of labor department Job Openings and Labor Turnover Survey The number of available positions rose to 8.1 million, an increase of 259,000 for the month and above the Dow Jones estimate of 7.7 million. Also, the number of people leaving dropped to 3.06 million, a decline of 218,000.
The level of job opportunities for available workers remained around 1.1 to 1.
