ISM Services PMI Declines to 50.6, Fails to Meet Expectations

• In December, the ISM Services PMI dropped from 52.7, down to 50.6 from its November level.
• The New Orders Index decreased from 55.5 to 52.8.
• The Employment Index fell from 50.7 to 43.3.  

On January 5, 2024, the ISM Services PMI report was issued by the Institute for Supply Management. It revealed a decline in the ISM Services PMI from 52.7 in November to 50.6 in December, compared to the analyst consensus of 52.6. Figures above 50 indicate expansion.

The New Orders Index fell from 55.5 in November to 52.8 in December, and the Employment Index dropped from 50.7 to 43.3.

The Institute for Supply Management remarked that "The services sector experienced a slowdown in growth in December, attributed to a decline in the growth rate for new orders and a reduction in employment [...] Concerns exist regarding economic uncertainty, geopolitical events, and labor constraints."

Traders also had the opportunity to review the Factory Orders report, which indicated a 2.6% month-over-month increase in November, surpassing the analyst consensus of +2.1%.

In response to the weaker-than-expected ISM Services PMI report, the U.S. Dollar Index tested session lows. Currently, it is attempting to settle below the 102.00 level.

Gold made an effort to settle above the $2060 level as traders focused on the U.S. dollar's decline and decreasing Treasury yields.

The S&P 500 tested session highs above the 4720 level as traders anticipated a more dovish stance from the Fed following the release of the ISM Services PMI data.