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U.S. private sector output grows strongly in December, service sector growth decelerates again

Private sector output in the U.S. continued to grow at a strong rate in December, but a deceleration in the service economy added to the softest overall growth for just one-and-a-half years. The flash Services PMI Business Activity Index was the lowest since January and hinted at a comparatively subdued rate of output growth in the service economy.

Furthermore, the latest data hinted at a further deceleration in new business growth at service sector companies. New work rose at the softest rate since April 2017, which added to a fall in unfinished business for the first time in four months. In the meantime, service providers showed that rising pay pressures continued to push up their operating expenses in December. Nevertheless, the attest rise in average cost burdens was the slowest for one year, attributing to the reduced transportation costs.

Manufacturing production volumes rose strongly in the month, with the pace of growth unchanged since the previous month. Adjusted for seasonal influences, the IHS Markit Flash manufacturing PMI index dropped to 53.9 from 55.3, hinting at the weakest overall rebound in operating conditions since November 2017.

The decline in the headline PMI mainly showed softer contributions from new orders and employment growth at the end of the year. The rate of manufacturing job creation was the weakest since August 2017. More cautious staff hiring policies were partially because of a fall in business optimism to its lowest for 26 months, which several companies linked to worries regarding the outlook for the global economy. Some companies also commented on pressure on operating margins after a sustained period of rising raw material costs.

At 18:00 GMT the FxWirePro's Hourly Strength Index of US Dollar was neutral at 20.2342. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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January 23 15:00 UTC Released

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