US services sector stumbles as orders slow Activity in the US services sector unexpectedly declined in December as new orders slowed even as employment rebounded. The Institute for Supply Management on Monday said its non-manufacturing index fell to 53, from 53.9 in November. Consensus forecasts had predicted a level of 54.8. Economists were encouraged by the employment gauge which rose to 55.8 in December from 52.5 the month before - a positive indicator ahead of Friday's nonfarm payroll report. But concerns rose about the drop in the new orders component to 49.4 last month from 56.4 in November, which was the weakest reading in this indicator since May 2009. "We do not expect this downside surprise in orders to persist, but further contractionary prints in the coming months would be a concern," said Cooper Howes, economist at Barclays. Despite the drop in the headline number the index remained firmly in growth territory - a reading greater than 50 indicates expansion in the industries that make up almost 85 per cent of the economy. A separate release from the commerce department provided further indication the manufacturing industry enjoyed stronger growth than the services sector toward the end of last year. Factory orders gained 1.8 per cent in November, in line with expectations, from an upwardly revised 0.5 per cent decline in October. On an overall dollar basis, orders for manufactured goods reached $478bn - the highest level since records began in 1992. Factory orders rose in most categories, with notable gains in transportation. New orders for transportation equipment increased 8.3 per cent after falling 3.5 per cent in October. Excluding the volatile transportation category, new orders increased 0.6 per cent in November, after edging 0.1 per cent higher the prior month. Orders for machinery, computer and electronic products and fabricated metal products all increased. Although the pace of growth is forecast to slow in the fourth quarter from the prior three months when businesses sought to boost inventories, the economy has been gathering underlying strength which economists believe is enough to set it on a faster rate of growth in 2013. Much of the better fortunes of the world's largest economy have reflected an acceleration in domestic demand and diminishing uncertainty over the country's budget. Orders for non-defence capital goods excluding aircraft - seen as a measure of business confidence and spending - increased 4.1 per cent.