PMI services ended December at 51.4, extending a recent trend of modest month-to-month growth in general activity. The ISM services index, which will be posted tomorrow, has been running slightly higher than the services PMI and is expected to come in at 52.7 which would be unchanged from November.

But the PMI sample may begin catcing up with the ISM based on new orders which the report said rose at their sharpest rate since June. The report also cites gains for business confidence and employment. Price readings are mixed: input costs are up but pass through to customer slowed.

When combined with the previously released manufacturing PMI, which rose 6 tenths to 51.4, the composite PMI edged higher to 50.9 to indicate very modest growth but still the best growth since July.

For the composite PMI December final, the consensus calls for no change from the 51.0 flash. The composite ended November at 50.7. For the services PMI December final, the consensus also sees no change at 51.3 from the mid-month flash of 51.3. This index ended November at 50.8.

US Services Purchasing Managers' Index (PMI) is based on monthly questionnaire surveys collected from over 400 U.S. companies which provide a leading indication of what is happening in the private sector services economy. It is seasonally adjusted and is calculated from seven components, including New Business, Employment and Business Expectations.

Investors need to keep their fingers on the pulse of the economy because it indicates how various types of investments will perform. The Markit Services PMI provides advance insight into the services sector, which gives investors a better understanding of business conditions and valuable information about the economic backdrop of various markets. The stock market likes to see healthy economic growth which generally translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly and causing potential inflationary pressures. The PMI data are also used by many Central Banks to help make interest rate decisions.

The IHS Markit Services Flash data give a detailed look at the services sector, the pace of growth and the direction of this sector. Since the service sector accounts for more than three-quarters of U.S. GDP, this report has a significant influence on the markets. In addition, its sub-indexes provide a picture of new business, employment, business expectations and prices.