The Institute for Supply Management reports on growth at U.S. services firms in December. The ISM will release its services index at 10 a.m. Eastern on Monday. SLIGHT PICKUP: Economists forecast that the index rose to 54.5 in December, according to a survey by FactSet. That would be up from 53.9 in the previous month. Any reading above 50 indicates growth. The ISM is a trade group of purchasing managers. The survey covers businesses that employ 90 percent of the workforce, including retail, construction, health care and financial services firms. MODEST GAINS: Service companies have grown at a modest pace this year. The index briefly rose to an eight-year high of 58.6 in August but then dropped to 54.4 in September. It has averaged 55 over the past 12 months. The survey typically follows growth in consumer spending, which was restrained for most of last year. But Americans have opened their wallets a bit more in recent months. That's a big reason economists expect activity increased last month. Retail sales posted healthy gains in November and December, according to government figures. The biggest increases were at auto dealers, furniture stores, and at electronics and appliances stores. Those outlets have benefited as Americans have spent more on houses and cars. Online shopping has also grown at a strong pace. Traditional retailers, such as department stores, grocery stores and clothing stores, haven't benefited as much. In November's ISM survey, measures of sales and new orders increased, though at a slower pace than the previous month. A measure of hiring fell sharply to 52.5 from 56.2. That suggested service firms were still adding jobs, but at a slower pace. MOMEMTUM BUILDING: A pickup in the ISM's services index would add to other recent signs that growth may accelerate this year. The ISM said Thursday that its manufacturing index remained near a 2 ½-year high in November. Measures of new orders and employment grew at a faster pace, pointing to higher output in the coming months. Construction spending, meanwhile, rose to its highest level in more than four years in November, the government said. Solid growth in home and apartment construction helped drive the gain. That suggests the housing recovery will persist despite higher mortgage rates. The economy expanded at a 4.1 percent annual pace in the July-September quarter, buoyed by a big increase in companies' stockpiles. That was the fastest pace in nearly two years. Growth was likely slower in the October-December quarter because inventory building probably didn't boost growth by as much. But economists are getting more optimistic about the fourth quarter. Many now expect growth will reach 2.5 percent to 3 percent at an annual rate, up from around 2 percent just a few weeks ago.
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