The business activity in the US services sector unexpectedly fell in December, shattering the optimism about the US economy, showed the preliminary data released on Wednesday.
The report from Markit research firm said that purchasing managers index in the US service sector fell to 53.4 in December from 54.6 in the previous month. The analysts had expected the index to increase to 55.2.
About the index, a reading above 50.0 indicates expansion, while when it is below 50.0 – it suggests a decline in activity.
In the service sector there is created approximately 80% of the US GDP, so the data is regarded as a key indicator of economic growth.
Markit pointed out in their study that in spite of the drop in business activity to a minimum of three months, the pace of job creation reached a nine-month high.
"While the increase in activity in the services sector slowed in December, the PMI surveys suggest that the economy continues to grow steadily at the end of the year", - said the chief economist at Markit, Chris Williamson.
According to the expert, these data suggest a GDP growth in the fourth quarter by 2.0%, mainly due to the increase in domestic demand.
"In the new year, when the government will change and the focus will shift to the fiscal stimulus, it is expected that economic growth and the labor market situation will continue to improve in 2017," - said Williamson.
"We expect that the GDP growth will accelerate to a stable 2.3% in 2017, and the Fed will raise rates three times," - he concluded.
Later, at 18:30 GMT, Janet Yellen, the Fed’s chief, will deliver a report on the labor market in Baltimore, Maryland.
Her speech will come just a few days after the US central bank raised interest rates and made it clear that it will accelerate the pace of further increase in the next year.
The markets assess the probability of three consecutive increases by the end of the next year at 46%.