The US services sector’s doing just fine, thank you very much.

On the heels of a decent private sector hiring readout from ADP, ISM services printed 54.4 for December, up meaningfully from the prior month, ahead of estimates and the highest in over a year.

The upbeat snapshot helps offset another downcast read on US manufacturing, which remains mired in a never-ending recession.

ISM’s Steve Miller called the results “encouraging.” “For the first time since February 2025, all four PMI subindexes are in expansion territory,” he remarked.

Although the panelist anecdotes were replete with references to input cost pressures and tariffs, the prices gauge slipped to 64.3, uncomfortably high to be sure, but a nine-month low and below estimates.

At the same time, the employment gauge rose more than three points from November to 52, the first expansion-territory print since May and the best overall result on that measure in 10 months.

Taken together, the prices/employment combo counts as the least stagflationary in quite a long time.

Notably, new orders moved up very sharply, rising five full points to 57.9 (the highest since September of 2024), while the activity gauge was a likewise robust 56.

You don’t need a lot of complicated analysis here: This counted as an objectively solid release, with all the usual caveats to account for tariff angst and accompanying uncertainty.