The headline figure dropped to 62% on the month from 69.1%, marking the 10th month in a row that the index exceeded 60%.
But even with all of those risks, a 62% service PMI level was still higher than in the previous two decades. In fact, one has to go back to 1997 to find a higher service PMI, which was at 62.03%. The decrease in overall service activities was driven by softer demand in December as the subindices for business activities and new orders both fell to 67.4% from 74.6%, and to 61.5% from 69.7%, respectively. Snarled supply chains remained the top issue for service providers as shortages of input materials and labor made it harder for businesses to satisfy expanding demand. Both subindices for inventory change and inventory sentiment were under 50, indicating a contracting rate of inventories. Survey respondents expressed these concerns in their comments. Most respondents mentioned problems with inventories and supply of materials. “Long lead times, transportation bottlenecks, delivery inconsistency and price increases continue to affect a range of products,” said a survey respondent working in the retail trade industry. Prices paid for services remained elevated as the subindex for price level registered at 82.5%, slightly higher than in the prior month, which was at 82.3%.