Service Sector Indicator Modestly Weaker in December

Non-manufacturing ISM fell to 53.9 (consensus 53.5) in December from54.1 in November. Though the decline was less than expected, it stillbrings the index to its lowest level in 9 months. Following theweakness in employment this morning, and continuing erosion of themanufacturing and housing sectors, any indication of weakness in theservice sector will be viewed ominously by the markets, as a furtherindication of recessionary tendencies in the economy. Services nowmake up 87% of the total US economy. As long as the reading staysabove 50, it indicates continued expansion.
The notable weakness in today's report was for new export orders,which declined to 50 from 55.5 the prior month. Many other categoriesactually showed improvement. New orders rose to 53.5 from 51.1, orderbacklogs rose slightly but remains negative at 49, employment rose to52.1, and prices paid eased back to 72.7 from 76.5.
Industries experiencing growth in December include retail trade,information, professional and scientific, construction, and healthcare.
Weakness was observed in management support services, other services,food and hotel, real estate, leasing, finance and insurance, wholesaletrade, education, and entertainment.