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US service sector growth improves to 4-month high, ISM says

Growth in the U.S. non-manufacturing sector accelerated in December 2019 to its fastest pace in four months, surpassing analysts' expectations as output sharply improved, the latest survey data from the Institute for Supply Management showed.

The ISM's seasonally adjusted non-manufacturing index climbed to 55.0% in December 2019 from 53.9% recorded in the previous month. That was the highest index level since August 2019.

The consensus estimate of economists polled by Econoday was for an index reading of 54.5%. A reading above 50% indicates expansion.

Non-manufacturing business activity or production registered significant growth, with the corresponding index rising month over month to 57.2% from 51.6%. On the other hand, the new orders index dipped to 54.9% from 57.1%, while the employment index decreased to 55.2% from 55.5%.

"Capacity constraints have eased a bit; however, respondents continue to have difficulty with labor resources," said Anthony Nieves, chair of the ISM Non-Manufacturing Business Survey Committee. He added that most respondents expressed optimism regarding an end to the high tariffs resulting from the trade dispute between the U.S. and China.

According to the ISM, 11 non-manufacturing industries reported growth in December 2019, led by retail, entertainment and business support services.