Business activity in the U.S. service sector continued to rise strongly in December, as signalled by the Markit Flash U.S. Services PMI™ Business Activity Index. At 56.0, the ‘flash’ PMI reading, which is based on approximately 85% of usual monthly replies, was up slightly from November’s 55.9 and above the series average of 55.5.
New business at service providers rose at a marked and accelerated pace in December. The latest increase in new orders was the strongest since April 2012 and was a factor behind a second monthly rise in backlogs of work. The level of outstanding business continued to rise at a solid pace, despite the rate of growth having eased from November’s record high.
Reflective of increased activity, service providers hired additional staff in December. Notably, the rate of employment growth accelerated quickly from November’s eight-month low to its fastest since data collection began in October 2009. (…)
Firms passed on greater costs to clients by raising their selling prices in December. Output charges rose for the sixth consecutive month, although the latest increase was the weakest since September.
The Markit U.S. Composite PMI Output Index, which is based on original survey data from the Markit U.S. Services PMI and the Markit U.S. Manufacturing PMI, was unchanged at 56.2 in December. This indicated that business activity across the manufacturing and service sectors combined continued to rise strongly and at a pace that was faster than the series average (55.4).