Service sector growth slows in Dec., factory orders fall in Nov.

January 07 02:32 2016

A private survey says U.S. services companies grew in December at the slowest pace since early 2014. The Institute for Supply Management said Wednesday that its services index dipped to 55.3 last month from 55.9 in November. The December reading matched the most recent low of 55.3 set in April 2014. Still, any reading above 50 signals that services firms are expanding.

The survey showed faster growth for business activity, new orders and employment last month, but supplier deliveries and inventories fell. Last year, services helped support U.S. economic growth. Employers have added 2.6 million jobs in the past 12 months, with nearly 90 percent of the jobs coming from the services sector as auto sales have hit record highs and spending at restaurants has surged.

In a separate report, orders to U.S. factories declined in November for the third time in the past four months. A key category that tracks business investment fell as well. The Commerce Department says factory orders dipped 0.2% in November after a 1.3% increase in October. A closely watched category that serves as a proxy for business investment plans fell 0.3%.

American manufacturers have struggled this year with a strong dollar, which has made their products pricier and less competitive overseas. In addition, economic weakness in many major export markets, from Europe to China, has also hurt U.S. sales abroad.