US services activity rose to 54.4% in December, ISM says
The ISM Services PMI reached its highest 2025 reading, with employment returning to expansion and prices easing but still elevated.
By David L. Chen · Senior Columnist
· 3 min read
US services activity strengthened in December, with the Institute for Supply Management’s Services PMI rising to 54.4 percent from 52.6 percent in November. The reading marked a third straight month of expansion and the highest level recorded in 2025, according to ISM.
The report points to firmer late-year demand across service industries, while also showing continued cost pressure. ISM said the services sector remained in expansion for the 10th month of the year, based on responses from the nation’s purchasing and supply executives.
The PMI is a diffusion index: readings above 50 percent indicate expansion, while readings below 50 percent indicate contraction. The measure does not show the size of output in dollar terms. It shows whether more survey respondents report better conditions than worse conditions across the components tracked by ISM.
Steve Miller, chair of ISM’s Services Business Survey Committee, said the December index was 1.8 percentage points higher than November’s 52.6 percent reading. He said the sector ended the year with its strongest PMI reading of 2025.
Demand and activity improved
Business activity remained above the 50 percent threshold in December. ISM reported that the Business Activity Index rose to 56 percent, up 1.5 percentage points from 54.5 percent in November.
New orders also strengthened. The New Orders Index increased to 57.9 percent from 52.9 percent in November, a gain of 5 percentage points, according to ISM. New orders are watched as a gauge of forward demand because they capture fresh work entering service providers’ pipelines.
The employment component moved back into expansion for the first time in seven months. ISM said the Employment Index registered 52 percent in December, compared with 48.9 percent in November. The 3.1 percentage point rise was the fifth consecutive monthly improvement since the index stood at 46.4 percent in July.
Calculated Risk noted that services employment had contracted for six consecutive months before the December expansion reading.
Supplier delays remained in expansion territory
The Supplier Deliveries Index fell to 51.8 percent in December from 54.1 percent in November, ISM said. The index has remained above 50 percent for 13 consecutive months.
Supplier deliveries are interpreted differently from the other ISM components. ISM said it is the only index in the PMI reports that is inverted: a reading above 50 percent indicates slower delivery times, which ISM said is commonly associated with improving economic activity and stronger customer demand.
Price pressure eased but remained high by the standards of the report. The Prices Index declined to 64.3 percent in December from 65.4 percent in November, its lowest level since March 2025, when the index was 60.9 percent, according to ISM.
Even after the decline, ISM said the Prices Index has remained above 60 percent for 13 straight months. The data indicate that service-sector firms continued to report rising prices in December, although at a lower rate than in the prior month’s survey.
This story draws on original reporting from Calculated Risk.
