A recent report from the Institute for Supply Management, published on Wednesday, reveals that growth in the U.S. service sector decelerated more than anticipated during November. According to the ISM, the Services Purchasing Managers' Index (PMI) dropped to 52.1 in November, down from 56.0 in October. While any figure above 50 signifies growth, the forecast had suggested a more modest decline to 55.5.
The more significant-than-expected decrease in the headline index was attributed to several factors: the business activity index decreased to 53.7 in November from 57.2 in October, and the new orders index fell to 53.7 from 57.4 over the same period. Additionally, the employment index dipped to 51.5 from 53.0, reflecting a modest slowdown in job growth within the service sector.
Despite the drop in the services PMI, Steve Miller, Chair of the ISM Services Business Survey Committee, highlighted that "14 industries reported business activity growth, and 13 indicated new orders expansion; both figures represent improvements compared to October." He stated that such data "reinforces the view observed over recent months that the service sector is on a trajectory of sustained growth."
Regarding inflation, the report noted a slight increase in the prices index, which edged up to 58.2 in November from 58.1 in October, signaling a marginally quicker pace of price growth.
In a separate release earlier this week, the ISM indicated that the U.S. manufacturing sector showed unexpected improvement in November, despite continuing to contract. The manufacturing PMI increased to 48.4 in November from 46.5 in October, contrary to the economist predictions of a rise to 47.5. However, a figure below 50 still signifies contraction in the manufacturing sector.
