Services sector expands in December
Economic activity in the services sector continued to expand in December, say the nation’s purchasing and supply executives in the latest ISM Services PMI Report.
The Services PMI registered at 54.4 %, finishing 2025 on a positive note with its 10th month in expansion territory — and its highest reading — of the year.
The report was issued today by Steve Miller, CPSM, CSCP, Chair of the Institute for Supply Management (ISM) Services Business Survey Committee:
“In December, the Services PMI registered a reading of 54.4%, 1.8 percentage points higher than the November figure of 52.6% and a third consecutive month of expansion. The Business Activity Index continued in expansion territory in December, registering 56 %, 1.5 percentage points higher than the reading of 54.5% recorded in November. The New Orders Index also remained in expansion in December, with a reading of 57.9%, 5 percentage points above November’s figure of 52.9 %. The Employment Index expanded for the first time in seven months with a reading of 52%, a 3.1-percentage point improvement from the 48.9% recorded in November — the fifth consecutive monthly increase since a reading of 46.4% in July.
“The Supplier Deliveries Index registered 51.8 %, 2.3 percentage points lower than the 54.1% recorded in November. This is the 13th consecutive month that the index has been in expansion territory, indicating slower supplier delivery performance. (Supplier Deliveries is the only ISM PMI Reports index that is inversed; a reading of above 50% indicates slower deliveries, which is typical as the economy improves and customer demand increases.)
“The Prices Index registered 64.3% in December, its lowest level since a reading of 60.9% in March 2025. The December figure was a 1.1-percentage point drop from November’s reading of 65.4%. The index has exceeded 60% for 13 straight months.
“The Inventories Index registered 54.2 %in December, an increase of 0.8 percentage point from November’s figure of 53.4% and in expansion territory for the second month in a row. The Inventory Sentiment Index expanded for the 32nd consecutive month, registering 54.1%, down 0.7 percentage point from November’s figure of 54.8 %. The Backlog of Orders Index was in contraction territory for the 10th month in a row, registering 42.6% in December, a 6.5-percentage point decrease from the November figure of 49.1%.
“Eleven industries reported growth in December, one fewer than in November, while the number reporting contraction remained at five. The December Services PMI reading of 54.4% is 2.7 percentage points above the 12-month average of 51.7%. However, the 12-month average continues at its lowest level since August 2024 (51.7%) for the third month in a row; it’s also the second lowest since June 2010 (51.4%).”
Miller continues, “December’s Services PMI is a continuation of a downward trend (as noted in previous reports) of more than 10 percentage points in the 12-month average since February 2022, when it was 62.6 %. In an encouraging sign, the PMI readings in November (52.6 percent) and December are in line with the same months in 2024 (November 52.5%; December 54%). Also, for the first time since February 2025, all four PMI subindexes are in expansion territory. Tariff impacts and seasonality were common themes among panelists’ comments. The Employment index returned to expansion for the first time since it registered 50.7% in May 2025. The Prices Index figure (64.3%) is 1.8 percentage points below the 12-month average of 66.1%. Respondents frequently mentioned impacts related to the holiday season and activity increases related to end-of-year activities or preparation for 2026.”
INDUSTRY PERFORMANCE
The 11 services industries reporting growth in December — listed in order — are: Retail Trade; Fi-nance & Insurance; Accommodation & Food Services; Transportation & Warehousing; Arts, Entertainment & Recreation; Mining; Health Care & Social Assistance; Information; Wholesale Trade; Public Administration; and Utilities. The five industries reporting a contraction in the month of December are: Management of Companies & Support Services; Professional, Scientific & Technical Services; Agriculture, Forestry, Fishing & Hunting; Educational Services; and Construction.
INDUSTRIAL SUPPLY MAGAZINE
The November/December issue of Industrial Supply magazine features an in-depth cover story about Applied Industrial Technologies. Plus, we're featuring articles by contributing writers Dr. Bharani Nagarathnam and Frank Hurtte, as well as interviews with numerous product and distribution industry experts.
