U.S. Services Index Unexpectedly Indicates Slightly Faster Growth In November

(RTTNews) - Service sector activity in the U.S. unexpectedly grew at a slightly faster rate in the month of November, according to a report released by the Institute for Supply Management on Wednesday.

The ISM said its services PMI inched up to 52.6 in November after climbing to 52.4 in October, with a reading above 50 indicating growth. Economists had expected the index to edge down to 52.1.

With the unexpected increase, the services PMI reached its highest level since hitting 53.5 in February.

The uptick by the headline index came amid a modest increase by the business activity index, which crept up to 54.5 in November from 54.3 in October.

The employment index also rose to 48.9 in November from 48.2 in October. While still in contraction territory, the index reached its highest reading since hitting 50.7 in May.

The report also said the backlog of orders index surged to 49.1 in November from 40.8 in October, marking its largest single-month increase since June 2022.

Meanwhile, the ISM said the new orders slid to 52.9 in November from 56.2 in October, although the reading above 50 still indicated the six straight month of growth.

"The continued expansion in both the Business Activity and New Orders indexes in November, and the highest Backlog of Orders index reading since February 2025 are positive signs of an emerging recovery for the services sector," said Steve Miller, Chair of the ISM Services Business Survey Committee.

He added, "On the downside, tariffs and the government shutdown continue to be noted by survey respondents as impacting both demand and costs."

On the inflation front, the report said the prices index slumped to 65.4 in November from 70.0 in October, hitting its lowest reading since April. The ISM released a separate report on Monday unexpectedly showing a modest decrease by its reading on U.S. manufacturing activity in the month of November.

The report said manufacturing PMI slipped to 48.2 in November from 48.7 in October, with a reading below 50 indicating contraction. Economists had expected the index to inch up to 49.0.