Service activity in the US accelerated in December, and the price index rose to a high level in nearly two years

The Zhitong Finance App learned that the growth of the US service sector accelerated in December last year, showing stronger commercial activity, which pushed the price index to the highest level since the beginning of 2023. According to data released by the American Institute for Supply Management (ISM) on Tuesday, the service sector index rose 2 points last month to 54.1. The index above 50 indicates economic expansion. Meanwhile, the price payment index for services and raw materials soared more than 6 points to 64.4.

After the data was released, the three major indices of the US stock market dived, and the short-term decline of spot gold extended to 10 US dollars, and is now reported at 2,644 US dollars/ounce. The short-term increase of the US dollar index DXY extended to 30 points and is now reported at 108.52.

The acceleration in price indicators comes at a time when the Federal Reserve is taking a more cautious approach to lowering interest rates. The resilience of demand is reflected in increased business activity and new orders, which heightens concerns that inflation may continue to persist. According to ISM data, the new orders index rose 0.5 points to 54.2, in line with the 2024 average. Coupled with an increase in the business activity index of 4.5 points to a three-month high, these data suggest that the US economy remained stable at the end of the fourth quarter.

Meanwhile, the ISM service sector employment index remained largely unchanged at 51.4. This indicates that the company is satisfied with the current staffing and believes it can meet current needs.

The growth of the service sector is in stark contrast to the weakness of the manufacturing sector. Last week, the ISM manufacturing index showed that manufacturing activity in December contracted for the ninth month in a row. Challenges facing manufacturers include a strong dollar, potential tariffs, and uncertainty in dockworker contract negotiations, which are scheduled to resume on Tuesday.