The Institute for Supply Management (ISM) reported a notable slowdown in U.S. service sector growth for November. The Services PMI dropped to 52.1 from 56.0 in October, missing economists’ expectations of 55.5. Although a reading above 50 signals growth, the larger-than-expected decline reflects challenges in the sector.
Key components of the index showed declines: the business activity index fell to 53.7 from 57.2, and the new orders index similarly dropped to 53.7 from 57.4. Employment growth also slowed, with the employment index easing to 51.5 from 53.0.
However, Steve Miller, Chair of the ISM Services Business Survey Committee, noted positive signs. “Fourteen industries reported growth in business activity, and thirteen saw new orders expand, showing improvements compared to October,” he said, emphasizing that the services sector remains on a trajectory of sustained growth.
Inflation data showed a slight uptick, with the prices index rising marginally to 58.2 in November from 58.1 in October, indicating modestly faster price increases.
Separately, the ISM’s report on manufacturing showed some recovery, with the manufacturing PMI increasing to 48.4 in November from 46.5 in October. While the gain was better than economists’ predictions of 47.5, the sector remains in contraction territory as readings below 50 indicate decline.
Conclusion
The slowdown in the services sector suggests that economic growth might be moderating, particularly in industries sensitive to consumer demand. Despite this, the sector’s resilience, highlighted by sustained activity and new orders growth, provides optimism.
Inflation creeping up, though slight, underscores the need for vigilance on price pressures. Meanwhile, manufacturing’s struggle to emerge from contraction reflects broader economic headwinds, making these mixed signals a call for cautious optimism moving forward.
Insight from RTTNews