The numbers: The Institute for Supply Management's nonmanufacturing index sank 1.5 points to 55.9% in December.
What happened: ISM's services gauge tracks activity in the economy that's not related to manufacturing. It's decelerated each month since October, when it touched a 12-year high.
Any reading over 50% indicates improving conditions. As ISM put it, "the majority of respondents' comments indicate that they finished the year on a positive note. They also indicate optimism for business conditions and the economic outlook going forward."
Still, the MarketWatch consensus forecast was for a small increase, to 57.6%.
In December, ISM's new orders subindex slid 4.4 points to 54.3, signaling slower activity lies ahead. The jobs subindex rose 1 point to 56.3. And the gauge of prices paid ticked up 0.1 point to 60.8, a reminder that many economists expect inflationary pressures for industry ahead.
Big picture: The economy continues to grow, and has muscled through the energy crisis that caused a plunge in hiring, capital spending and inflation in 2015. Still, the expansion is getting old, meaning growth can't continue at the same pace as a few years ago.
Read: U.S. hiring slows at end of 2017 as job gains slacken to 148,000 in December
"Ending the year with profits and business levels on track. 2018 is projected to be as productive with an optimistic outlook," a survey respondent in the finance and insurance industry told ISM.
One of the few downbeat comments came from a respondent representing the construction industry: "Lumber prices are increasing due to product [being] damaged in the recent wildfires. Duties on steel from Vietnam is expected to cause an increase in steel prices. Ongoing shortages in construction related [to] labor continue to be a problem."
What are they saying? December's reading "looks more like a correction than the start of a trend decline," said Ian Shepherdson, chief economist for Pantheon Macro. "The October and November readings, 59.8 and 60.1 respectively, always looked too high to be sustained."
US non-manufacturing #ISM cools to 55.9 (-1.5) in Dec as business activity and new orders fall to 57.3 & 54.3. Employment & supplier deliveries firm to 56.3 & 55.5. Backlogs neutral. Prices still rising strongly. Trade going strong. pic.twitter.com/2nzltfIOdI
— Gregory Daco (@GregDaco) January 5, 2018Market reaction: The 10-year Treasury note yieldTMUBMUSD10Y, +0.00% ticked up a bit after the data release.