In December, the service industry activity in the United States accelerated, and the price index rose to a near two-year high.

The growth in the US service sector accelerated in December last year, indicating stronger business activity, which pushed the price index to its highest level since early 2023. Data released by the Institute for Supply Management (ISM) on Tuesday showed that the service sector index increased by 2 points last month, reaching 54.1. A reading above 50 indicates economic expansion. Meanwhile, the service and material price payment index soared by over 6 points to 64.4. Following the release of this data, the three major US stock indexes plummeted, with short-term losses in spot gold expanding to $10, now trading at $2644 per ounce. The short-term gain in the US dollar index DXY widened to 30 points, now standing at 108.52. The accelerated rise 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 the increase in business activity and new orders, intensifying concerns that inflation may persist stubbornly. ISM data shows that the new orders index increased by 0.5 points to 54.2, consistent with the average level in 2024. Coupled with a 4.5-point increase in the business activity index to a three-month high, these data suggest that the US economy remained strong at the end of the fourth quarter. Meanwhile, the ISM service sector employment index remained essentially unchanged at 51.4. This indicates that businesses are satisfied with their current staffing levels and believe they can meet current demand. The growth in the service sector stands in sharp contrast to the weakness in the manufacturing sector. Last week, the ISM manufacturing index showed that manufacturing activity contracted for the ninth consecutive month in December. Challenges faced by manufacturers include a strong US dollar, potential tariffs, and uncertainty surrounding dockworker contract negotiations, which are scheduled to resume on Tuesday.