US ISM’s Miller: Not Out of Tariffs Woods Yet but Sitting on Their Edge
By Max Sato
(MaceNews) – The U.S. services sector was in expansion territory for the third straight month in December as customers’ yearend budget spending lifted retailers and the flu vaccine season supported healthcare service providers but stiff Trump tariffs are still keeping import costs high, data from the Institute for Supply Management showed Wednesday.
The ISM purchasing managers index, which shows the directional change of economic activity, rose 1.8 percentage points to 54.4 after edging up 0.2 point to 52.6 in November. December’s index was the highest since 55.8 in October 2024 and topped the consensus call of 52.2. More qualified workers became available in a stabilizing labor market, prompting some firms to fill frozen positions, the ISM said.
All of the four sub-indexes that directly factor into the services PMI were in expansion territory in December for the first time since February 2025. They are business activity/production (+1.5 points at 56.0), new orders (+5.0 at 57.9), employment (+3.1 at 52.0) and supplier deliveries, the only inversed subindex (-2.3 at 51.8).
“Generally, this is a really good result,” Steve Miller, chair of the ISM Services Business Survey Committee, told Mace News.
Looking at the recent trend, however, the 12-month moving average of the services PMI stood at 51.7 in December as in the previous two months and staying at the lowest since 51.7 in August 2024 and the second lowest since 51.4 in June 2010.
“There’s been a pattern over the past six months of significant increases followed by significant decreases,” Miller told reporters.
He also told Mace News that he sees “a good sign” in the employment subindex, which rose 3.1 points to a 10-month high of 52.0 at end of 2025, compared to a slight gain in December 2024 and declines in the previous four Decembers.
Asked whether the U.S. services sector is out of the woods yet in terms of the drag from the protectionist U.S. trade policy, Miller said the PMI at 54.4 in December is “a big number” but also noted that the 12-moving average is still low.
“So, I wouldn’t say we are out of the woods but certainly sitting on the edge of the woods,” he said.
The prices paid subindex fell 1.1 points to 64.3 in December, its lowest level since 60.9 in March 2025, but it has exceeded 60 for 13 straight months.
“We continue to experience higher prices, primarily due to the impact of the administration’s trade and tariff policies,” a company in the accommodation and food services category told the ISM. “We are disproportionately impacted by importing seafood from Southeast Asia and coffee from South America.”
An information service provider said, “Annual pricing markups from key service and data providers are higher than they’ve been for many years — gradually drives costs up.”