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Service sector expands less than expected in December

The pace of growth in the U.S. services sector slowed for a second straight month in December with business activity expanding at a lower rate and new orders contracting, according to an industry report released on Monday.

The Institute for Supply Management said its services index fell to 53 last month from 53.9 in November. The reading was below expectations for a reading of 54.5, according to a Reuters survey of economists, and the lowest reading for the index since June 2013.

(Click here to track the U.S. stock market indices following the report.)

With a reading above 50 indicating expansion, December marked the 48th straight month of growth in the services sector.

A waitress prepares a drink order Bar Louie restaurant located in the River North neighborhood of Chicago.
Tim Boyle | Bloomberg | Getty Images
A waitress prepares a drink order Bar Louie restaurant located in the River North neighborhood of Chicago.

The gauge of business activity dipped to 55.2 from 55.5, the weakest reading for the subindex since September and below expectations for a reading of 56.5.

The read on new orders showed contraction for the first time since July 2009 as it fell below the 50 mark. It dropped to 49.4 in December from 56.4, the lowest reading for new orders since May 2009.

On a positive note, the employment gauge rose to 55.8 from 52.5 in November.

US factory orders rebound

New orders for U.S. factory goods rebounded in November, adding to signs of strong momentum in the economy in late 2013.

The Commerce Department said on Monday new orders for manufactured goods increased 1.8 percent. October's orders were revised to show a 0.5 percent drop instead of the previously reported 0.9 percent fall.

Economists polled by Reuters had forecast new orders received by factories rising 1.8 percent.

—Reuters

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