Employment activity in the non-manufacturing sector grew in December for the seventh consecutive month. ISM(R) 's Non-Manufacturing Employment Index registered 53.8 percent, which reflects a decrease of 4.4 percentage points when compared to the November reading of 58.2 percent. Nine industries reported increased employment, and four industries reported decreased employment. Comments from respondents include: "We reduced our workforce in December due to missed sales forecast and revenue misses" and "Less labor hours to align with reduced business needs."

The nine industries reporting an increase in employment in December -- listed in order -- are: Educational Services; Retail Trade; Finance & Insurance; Other Services; Construction; Accommodation & Food Services; Health Care & Social Assistance; Professional, Scientific & Technical Services; and Public Administration. The four industries reporting a reduction in employment in December are: Utilities; Transportation & Warehousing; Wholesale Trade; and Information.

Employment %Higher %Same %Lower Index

Dec 2016 20 65 15 53.8

Nov 2016 20 66 14 58.2

Oct 2016 20 63 17 53.1

Sep 2016 21 66 13 57.2

Supplier Deliveries

Supplier deliveries were slower in December for the 12th consecutive month. The index registered 52 percent, which is the same reading that was registered in November. A reading above 50 percent indicates slower deliveries, while a reading below 50 percent indicates faster deliveries. Comments from respondents include: "More availability of supplier capacity" and "[The] supply chain speeds up during holidays."

The seven industries reporting slower deliveries in December -- listed in order -- are: Other Services; Transportation & Warehousing; Professional, Scientific & Technical Services; Wholesale Trade; Health Care & Social Assistance; Information; and Public Administration. The two industries reporting faster deliveries in December are: Retail Trade; and Agriculture, Forestry, Fishing & Hunting. Nine industries reported no change in supplier deliveries in December compared to November.

Supplier Deliveries %Slower %Same %Faster Index

Dec 2016 10 84 6 52.0

Nov 2016 7 90 3 52.0

Oct 2016 7 87 6 50.5

Sep 2016 6 90 4 51.0

Inventories

ISM(R) 's Non-Manufacturing Inventories Index grew for the fourth consecutive month and registered 52 percent in December, which is 0.5 percentage point higher than the 51.5 percent that was reported in November. Of the totalrespondents in December, 32 percent indicated they do not have inventories, or do not measure them. Comments from respondents include: "Increased equipment inventory to cover current projects" and "Inventory is marginally higher than last month in anticipation of holiday activity."

The nine industries reporting an increase in inventories in December -- listed in order -- are: Agriculture, Forestry, Fishing & Hunting; Finance & Insurance; Mining; Utilities; Health Care & Social Assistance; Retail Trade; Accommodation & Food Services; Construction; and Public Administration. The six industries reporting decreases in inventories in December -- listed in order -- are: Arts, Entertainment & Recreation; Educational Services; Professional, Scientific & Technical Services; Transportation & Warehousing; Wholesale Trade; and Other Services.

Inventories %Higher %Same %Lower Index

Dec 2016 21 62 17 52.0

Nov 2016 2259 19 51.5

Oct 2016 23 58 19 52.0

Sep 2016 21 61 18 51.5

Prices

Prices paid by non-manufacturing organizations for purchased materials and services increased in December for the ninth consecutive month. ISM(R) 's Non-Manufacturing Prices Index for December registered 57 percent, 0.7 percentage point higher than the 56.3 percent reported in November. The proportion of respondents reporting higher prices is 14 percent, 77 percent indicated no change in prices paid, and 9 percent of the respondents reported lower prices.

The eight non-manufacturing industries reporting an increase in prices paid during the month of December -- listed in order -- are: Mining; Utilities; Wholesale Trade; Retail Trade; Public Administration; Health Care & Social Assistance; Construction; and Professional, Scientific & Technical Services. The three industries reporting a decrease in prices paid for the month of December are: Agriculture, Forestry, Fishing & Hunting; Finance & Insurance; and Information. Seven industries reported no change in prices in December compared to November.

Prices %Higher %Same %Lower Index

Dec 2016 14 77 9 57.0

Nov 2016 12 81 7 56.3

Oct 2016 13 81 6 56.6

Sep 2016 15 73 12 54.0

NOTE: Commodities reported as up in price and down in price are listed in the commodities section of this report.

Backlog of Orders

ISM(R) 's Non-Manufacturing Backlog of Orders Index indicates order backlogs contracted in December after three consecutive months of growth. The index registered 48 percent, which is 3 percentage points lower than the 51 percent reported in November. Of the total respondents in December, 38 percent indicated they do not measure backlog of orders.

The four industries reporting an increase in order backlogs in December are: Finance & Insurance; Professional, Scientific & Technical Services; Construction; and Retail Trade. The seven industries reporting a decrease in order backlogs in December -- listed in order -- are: Management of Companies & Support Services; Other Services; Information; Wholesale Trade; Health Care & Social Assistance; Public Administration; and Transportation & Warehousing.

Backlog of Orders %Higher %Same %Lower Index

Dec 2016 13 70 17 48.0

Nov 2016 16 70 14 51.0

Oct 2016 19 66 15 52.0

Sep 2016 15 74 11 52.0

New Export Orders

Orders and requests for services and other non-manufacturing activities to be provided outside of the United States by domestically based personnel grew in December for the fourth consecutive month. The New Export Orders Index for December registered 53 percent, which is 4 percentage points lower than the 57 percent reported in November. Of the total respondents in December, 67 percent indicated they either do not perform, or do not separately measure, orders for work outside of the United States.

The five industries reporting an increase in new export orders in December are: Professional, Scientific & Technical Services; Mining; Construction; Accommodation & Food Services; and Wholesale Trade. The three industries reporting a decrease in new export orders in December are: Arts, Entertainment & Recreation; Public Administration; and Other Services. Eight industries reported no change in new export orders in December compared to November.

New Export Orders %Higher %Same %Lower Index

Dec 2016 17 72 11 53.0

Nov 2016 19 76 5 57.0

Oct 2016 17 77 6 55.5

Sep 2016 19 75 6 56.5

Imports

Imports were unchanged in Decemberafter 10 consecutive months of growth. This month's reading at 50 percent is 4 percentage points lower than the reading of 54 percent reported in November. Fifty-six percent of respondents reported that they do not use, or do not track the use of, imported materials.

The four industries reporting an increase in imports for the month of December are: Agriculture, Forestry, Fishing & Hunting; Information; Accommodation & Food Services; and Wholesale Trade. The six industries reporting a decrease in imports for the month of December -- listed in order -- are: Arts, Entertainment & Recreation; Other Services; Health Care & Social Assistance; Construction; Professional, Scientific & Technical Services; and Retail Trade. Seven industries reported no change in imports in December compared to November.

Imports %Higher %Same %Lower Index

Dec 2016 8 84 8 50.0

Nov 2016 16 76 8 54.0

Oct 2016 12 826 53.0

Sep 2016 11 80 9 51.0

Inventory Sentiment

The ISM(R) Non-Manufacturing Inventory Sentiment Index in December registered 61.5 percent, which is 1 percentage point higher than the reading of 60.5 percent reported in November. This indicates that respondents believe their inventories are still too high at this time. In December, 29 percent of respondents said their inventories were too high, 6 percent said their inventories were too low, and 65 percent said their inventories were about right.

The 12 industries reporting a feeling that their inventories are too high in December -- listed in order -- are: Management of Companies & Support Services; Utilities; Wholesale Trade; Mining; Other Services; Information; Retail Trade; Finance & Insurance; Accommodation & Food Services; Construction; Public Administration; and Professional, Scientific & Technical Services. The three industries reporting a feelingthat their inventories are too low in December are: Agriculture, Forestry, Fishing & Hunting; Transportation & Warehousing; and Health Care & Social Assistance.

%Too %About %Too

Inventory Sentiment High Right Low Index

Dec 2016 29 65 6 61.5

Nov 2016 27 67 6 60.5

Oct 2016 29 66 5 62.0

Sep 2016 30 69 1 64.5

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January 05, 2017 10:15 ET (15:15 GMT)

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