U.S. Service Industries Expand at Near-Record Pace in November

(Bloomberg) -- A gauge of U.S. service industries unexpectedly rose in November to a near-record level amid gains in business activity and new orders, adding to indications that the sector remains robust in the fourth quarter.

The non-manufacturing index rose to 60.7, an Institute for Supply Management survey showed Thursday. That compared with estimates for a decline to 59. The advance was led by business activity and new orders, while a gauge of inventories rose for a third month.

Key Takeaways

  • The index, with the second-highest reading since the series began publication in 2008, signals consumer demand for services continues to grow, helping to bolster the economy and U.S. companies.
  • The report also indicated that continuing trade tensions and easing global growth are affecting service providers, a trend weighing on investors' perceptions of the economic outlook. Export orders decelerated by the most since May while a measure of imports rose the most since March.
  • Service companies still face bottlenecks: a measure of backlogs increased, while supplier delivery times lengthened, though delays eased slightly.
  • The employment gauge dropped for a second month even as it remained at a historically elevated level, signaling a solid but slightly cooling labor market before the jobs report due Friday.

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  • The main gauge increased from 60.3 in October. The index covers sectors representing about 90 percent of the U.S. economy. Readings above 50 in the main index signal expansion.
  • A separate services purchasing-managers index from IHS Markit was at 54.7 in November, compared with 54.8 in the prior month.
  • The ISM survey of manufacturers also rebounded in November, data released earlier this week showed, as orders picked up and companies added workers.
  • The report, originally scheduled for Wednesday, was moved to Thursday because of the national day of mourning for former President George H.W. Bush.

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