ISM Services Crashes Most Since April 2020 As Omicron Hits

After a drop in Markit’s Services survey and a tumble in ISM and Markit’s Manufacturing surveys, December’s ISM Services Index survey was expected to drop very modestly from the record high spike run it has been on in recent months. However, December’s ISM Services survey plunged to 62.0 from 69.1…

Source: Bloomberg

The 7.1-point decline was the sharpest since April 2020 and may suggest that the omicron variant of the coronavirus is beginning to take a toll on providers of in-person services like travel, dining out and entertainment.

Even so, the services gauge remains well above pre-pandemic levels.

Orders received by service providers dropped 8.2 points to 61.5, the lowest reading since February.

The November orders index was the highest in data back to 1997.

The ISM index of prices paid for materials edged up to 82.5, from 82.3 in November.

The inflation reading for services was at odds with a separate report from the ISM on Tuesday that showed a gauge of prices paid by manufacturers slumped in December to the lowest level in more than a year.

The ISM gauge of business activity, which parallels the group’s factory production measure, fell to a three-month low of 67.6 from a record in November.

Time for The Fed to tighten?