The US economy's services sector slowed in December, but not as badly as most Wall Street analysts had feared, the Institute of Supply Management said in a report today.
The ISM said its index of non-manufacturing activity moderated to 57.1% from 58.9% in November.
Analysts said the reports suggested the world's largest economy was treading water, but they did not expect the data to prompt an interest rate cut in the early part of 2007.
Despite the slowdown in activity, the reading, however, was slightly stronger-than-expected as most Wall Street analysts had forecast that the index would drop to 57%.
A figure above 50 indicates expansion, so the ISM report still indicates the services sector, which makes up the bulk of activity in the world's largest economy, is expanding albeit more slowly.
The prices index, a gauge of inflationary pressures, rose 3.5 points to 59.1%.
ISM survey chief Anthony Nieves said the overall indication in December is continued economic growth in the non-manufacturing sector, but at a slower pace than in November.
Recent data have painted a picture of a resilient economy. However, the Federal Reserve is closely watching the manufacturing sector as it monitors the economy to judge whether a cooling housing market has a broader-than-expected impact on growth.
Analysts expect the Fed to hold interest rates unchanged well into the first half of 2007. The central bank raised its target for the federal funds rate 17 times, to 5.25%, between June 2004 and June 2006.
In other news today, supporting the view of a slowing economy, was data that factory orders rose 0.9% in November, below the market's consensus outlook for a 1.4% gain.
New orders declined by a revised 4.5% in October from previous estimates of 4.7%. Excluding transportation, factory orders fell 0.5%, the Commerce Department said.
