WASHINGTON (Reuters) – U.S. services sector activity slowed in November after posting big gains in recent months, but remained above levels consistent with solid economic growth in the fourth quarter.
The Institute for Supply Management (ISM) said on Wednesday that its nonmanufacturing purchasing managers index (PMI) slipped to 52.1 last month after surging to 56.0 in October, which was the highest level since August 2022. Economists polled by Reuters had forecast the services PMI easing to 55.5.
A PMI reading above 50 indicates growth in the services sector, which accounts for more than two-thirds of the economy. The ISM views PMI readings above 49 over time as generally indicating an expansion of the overall economy.
The economy appears to have retained most of its momentum from the third quarter, with consumer spending rising at a brisk clip in October. Construction spending also picked up, though business spending on equipment probably softened early in the fourth quarter.
The Atlanta Federal Reserve is currently forecasting gross domestic product rising at a 3.2% annualized rate this quarter. The economy grew at a 2.8% pace in the July-September quarter.
The ISM survey’s new orders measure fell to 53.7 from 57.4 in October. Its prices paid measure for services inputs was little changed at 58.2. Rising prices for services like transportation, financial services and insurance have stalled progress lowering inflation to the Federal Reserve’s 2% target.
The survey’s measure of services employment slipped to 51.5 from 53.0 in October. This measure has not been a good predictor of services payrolls in the government’s closely watched employment report.
Nonfarm payrolls are expected to have accelerated in November after almost stalling amid disruptions from Hurricanes Helene and Milton as well as strikes by factory workers at Boeing and another aerospace company.
Rebuilding has started in the areas devastated by the storms and the strikes have since ended, laying the base for strong job growth last month. Nonfarm payrolls likely increased by 200,000 jobs in November after rising by only 12,000 in October, the fewest since December 2020, a Reuters survey showed.
(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama)
Comments