The US services sector exhibited continued expansion in November, as highlighted by data released by the Institute for Supply Management. However, the latest figures indicate a sequential slowdown in growth, while S&P Global reported an acceleration in the same period. The ISM's purchasing managers' index dropped to 52.1, down from 56 in October, disappointing market expectations that had forecasted a reading of 55.7 based on a survey compiled by Bloomberg.
A figure above 50 typically signifies that the services sector is expanding, and for the last 12 months, the average has remained at 52.2. In the report, 14 services industries noted growth in business activity, while 13 sectors witnessed a rise in new orders, both of which represent improvements compared to October.
Steve Miller, chair of the ISM’s services business survey committee, remarked, "This reinforces the view over the last several months that the services sector has returned to sustained growth." Moreover, the headline business activity index fell to 53.7 in November, dipping from 57.2 in the previous month, while new orders also decreased to 53.7 from 57.4.
The employment index also saw a decline, dropping to 51.5 from 53. The survey's findings do not seem to alter the outlook for consumer spending, particularly in the services sector, which is expected to sustain the economy's momentum, as noted by Oxford Economics Senior Economist Matthew Martin in remarks made to MT Newswires.
He commented, "The survey result does not influence our outlook for continued expansion in consumer spending, particularly on the services side, which will keep the economy humming along." Furthermore, he indicated that the Federal Reserve is unlikely to alter monetary policy based on potential changes in trade policy, predicting another rate cut in December, despite the fact that tariffs may create complications for the Fed.
In a separate report, S&P Global indicated that its services PMI surged to 56.1 in November, compared to 55 the month prior, marking the fastest expansion since March 2022. This acceleration is supported by a significant increase in new business activity not seen in over two and a half years. Job growth has declined for the fourth consecutive month, according to the same report.
The composite PMI output index by S&P Global reached a remarkable 31-month high of 54.9 in November, up from 54.1 in October. Chief Business Economist at S&P Global Market Intelligence, Chris Williamson, commented, "Companies have reported stronger demand for services, thanks to the clearing of political uncertainty following the election, as well as brighter prospects for the economy in 2025 linked to the incoming administration and hopes for lower interest rates." Earlier this week, both the ISM and S&P Global revealed that the contraction in the US manufacturing sector improved more than anticipated in November..