Investing.com – Activity in the U.S. services sector unexpectedly fell in December, dampening optimism over the state of the U.S. economy, according to preliminary data released on Monday.
In a report, market research group Markit said that its flash services purchasing managers’ index (PMI) fell to 53.4 in December, from the prior month’s reading of 54.6.
Analysts had expected the reading to increase to 55.2.
On the index, a reading above 50.0 indicates expansion, below indicates contraction.
Services make up approximately 80% of the U.S. economy which makes the data key for interpreting growth.
Markit indicated in the report that despit the fact that business activity growth eased to a three-month low, there was a robust improvement in new work and job creation hit a nine-month high.
“Although service sector growth cooled in December, the PMI surveys indicate that the economy continued to show solid, steady growth at the end of the year,” Markit chief economist Chris Williamson said.
According to this expert, the data suggested fourth quarter growth in gross domestic product (GDP) of 2.0%, fueled mainly by improving domestic demand.
“With the new year bringing a change of government and a shift in emphasis towards fiscal stimulus, economic growth and the labor market look set to strengthen further in 2017,” Williamson added.
“We expect GDP growth to accelerate to a steady but unexciting 2.3% in 2017, accompanied by three further quarter point rate hikes by the Fed,” he concluded.
Following the report, EUR/USD traded at 1.0440 from 1.0428 prior to the release, GBP/USD was at 1.2385 from 1.2375 earlier, while USD/JPY was at 117.14 compared to 117.08 previously.
The US dollar index, which tracks the greenback against a basket of six major rivals, was at 102.87, compared to 102.94 ahead of the report.
Meanwhile, U.S. stocks were trading higher after the open. The Dow 30 gained 34 points or 0.17%, the S&P 500 advanced 5 points, or 0.23%, while the tech-heavy Nasdaq Composite traded up 22 points or 0.41%.
Elsewhere, in the commodities market, gold futures traded at $1,140.05 a troy ounce, compared to $1,141.15 ahead of the data, while crude oil changed hands at $52.91 compared to $52.66 previously.