US services activity rebounded sharply in December, with the ISM Services PMI jumping from 52.6 to 54.4, well above expectations of 52.3, marking the highest level in more than a year. The reading sits comfortably above its 12-month average and points to a clear reacceleration in momentum toward year-end.
The strength was broad-based. Business activity rose from 54.5 to 56.0, while new orders surged from 52.9 to 57.9, signaling renewed demand. Most notably, employment index climbed from 48.9 to 52.0, returning to expansion territory for the first time since May 2025 and easing concerns about labor market softening in the services sector. Price pressures moderated slightly, with the prices index easing from 65.4 to 64.3, but remaining elevated.
Eleven industries reported growth in December, and the ISM noted that the headline reading historically aligns with roughly 1.9 percentage points of annualized GDP growth.
