Growth in U.S. Service Industries Cools From a 12-Year High

(Bloomberg) -- Growth in U.S. service industries cooled by more than forecast in November after the fastest expansion since 2005, as orders eased and supply chains normalized following two hurricanes, an Institute for Supply Management survey showed Tuesday.

Highlights of ISM Non-Manufacturing (November)

  • Non-manufacturing index fell to 57.4 (est. 59) from 60.1; readings above 50 indicate growth
  • Index of supplier deliveries fell to 54 from October’s 58 reading that matched the highest since November 2005
  • Measure of business activity eased to 61.4 from 62.2; gauge of new orders dropped to 58.7 from 62.8
  • 16 industries reported growth in November, led by retail and wholesale

Key Takeaways

The November retreat shows services are settling back to a more sustainable pace, though a weaker one than analysts were expecting for the month. Even with the slowdown, which follows a hurricane-related surge in activity, the index is above the 57 average for this year through October.

The four-point decline in the group’s index of supplier deliveries was the largest since the end of 2015, showing service providers are making progress after hurricanes disrupted schedules and delayed work in the previous two months. Now, delivery times are improving as the supply chain gets back to normal.

The report compares with a smaller drop in the ISM’s latest factory survey, which showed manufacturing expanded at a healthy pace in November amid a burst of production and rising orders.

The services sector spans industries such as retail, utilities, health care, and construction, and accounts for about 90 percent of the economy. The group’s measure of business activity, which parallels the ISM’s factory production index, has expanded for 100 straight months.

Official’s View

“They’re still confident that the year will finish out strong,” Anthony Nieves, chairman of the ISM non-manufacturing survey, said on a conference call with reporters. This pace of growth will continue through the balance of the year and “should carry over somewhat into January.”

Growth in U.S. Service Industries Cools From a 12-Year High

Other Details

  • Employment index declined to 55.3 from 57.5
  • Gauge of prices paid decreased to 60.7 from 62.7
  • Measure of order backlogs declined to 51.5 from 53.5
  • Export orders measure fell to 57 from 60

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