Contrary to the generally positive tone of most recent U.S. statistics, the service sector expanded less than predicted in December with new orders contracting for the first time since mid-2009, helping the euro recover from its lowest level against the dollar in a month.
The Institute for Supply Management’s (ISM) non-manufacturing index slipped to 53.0 from 53.9 in November, well under the median forecast of 54.7 from the Bloomberg survey of economists. The measure for new orders dipped to 49.4 in December the first instance below the 50 division between expansion and contraction since June 2009. As recently as August this index was at 60.5, a two and a half year high.
Employment registered a 0.6 point gain to 56.9, its strongest reading since June 2011. Business activity eased to 55.2 from 55.5, export orders dropped sharply to 51.5 from 58.0 and imports fell to 50.5 from 55.0.
The euro gained twenty points to 1.3635 immediately after the release having previously recovered twice that from 1.3570, its lowest against the U.S. currency since December 5th and subsequently reached 1.3653, the top so far today.
On Friday the ISM manufacturing index also reported a slightly weaker December outlook at 57.0 down from 57.3 the prior month, which had been the best level since April 2011.
But new orders in manufacturing went up to 64.2 from 63.6 and the employment index rose to 56.0 from 56.5, the best result since June 2011. Export orders skidded to 55.0 from 59.5 and imports were unchanged at 55.0.
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