WASHINGTON: Growth in the US services sector, the main driver of the world's largest economy, fell to its slowest rate in five months in December but remained strong, a business survey showed on Monday (Jan 7).
The result contrasted notably with a queasy drop in US manufacturing activity reported last week amid the US-China trade war, which sparked fears the US economy's current expansion could be slowing more quickly than anticipated.
The Institute for Supply Management's monthly survey showed the non-manufacturing index fell 3.1 points from November to 57.6 percent, marking the 107th month of uninterrupted growth.
The result fell short of expectations, as economists had forecast a smaller 1.8 point dip. Anything above 50 percent indicates growth.
"This rate of growth is still a very good rate of growth," Anthony Nieves, chair of ISM's survey committee for the non-manufacturing sector, told reporters.
"But because we've become accustomed to such a strong, high-revving economy over the last several months, we're looking at this rate of growth as being a detraction."
The index hit the lowest since July of 2018, with only one of 17 the industries - the mining sector - reporting contraction.
The slowdown was led by a sharp drop in business activity, which came despite a flurry of year-end retail sales.
Survey respondents continued express concern about punitive US tariffs on imported goods.
"Economy still chugging along, despite the rise in interest rates and relentless political claptrap," said one respondent in finance and insurance.
Indicators for employment, imports, inventories and deliveries all likewise ticked downward for the month.
Ian Shepherdson of Pantheon Macroeconomics said the result was "a correction, nothing more."
The report had overshot expectations after the year's late-summer hurricanes and was due to revert to underlying trends, he said in a client note.
Fundamentals in the services sector "are much better than in the industrial sector, where we think the ISM survey has further to fall."