U.S. Services Sector Growth Accelerates as Price Index Hits Two-Year High

December saw a rise in service activity and input costs, with tariff concerns and inflation shaping economic outlooks.

The Institute for Supply Management (ISM) reported its services index rose to 54.1% in December, indicating expansion and surpassing economists' expectations.
The prices index for services jumped to 64.4%, its highest level since February 2023, reflecting increased input costs and inflationary pressures.
Tariff concerns dominated business sentiment, with companies expressing uncertainty about potential policies under the incoming Trump administration.
The Federal Reserve is expected to take a cautious approach to further interest rate cuts, as inflation remains persistent and economic resilience continues.
Employment in the services sector showed little change, while new orders and business activity indices both increased, highlighting solid demand to close out 2024.