US service sector expands, but demand remains subdued: Report

ISTANBUL

Service sector expansion in the US picked up in December, but demand conditions remain historically subdued, S&P Global said in a report on Thursday.

"The US service sector signaled a quicker expansion in activity at the end of 2023," it said. "Service providers recorded a quicker expansion in new business at the end of 2023, as the rate of growth picked up to the fastest since June."

The S&P Global US Services PMI Business Activity Index came in at 51.4 in December, up 0.6 percentage point from 50.8 in November.

"Growth nevertheless remains subdued by standards seen over the spring and summer, with the struggling manufacturing sector dampening demand for business-to-business services and consumers remaining far less inclined to spend on luxuries such as travel and recreation than earlier in the year," said Chris Williamson, chief business economist at S&P Global Market Intelligence.

"The more challenging demand environment has dampened firms’ pricing power, squeezing service sector selling price inflation to the lowest for over three years on average during the fourth quarter," he added.