U.S. ISM Services PMI Drops in November, Still Indicating Expansion for the Fifth Straight Month
Summary
- 52.1 in Nov., a 3.9-pt. drop from Oct. & lower than expected; marginally below the 12-month avg. of 52.2.
- Business Activity (53.7, the 53rd expansion in 54 mths.), New Orders (53.7, the 52nd expansion in 54 mths.), Employment (51.5, the 4th expansion in 5 mths.), and Supplier Deliveries (49.5 vs. 56.4).
- Prices Index increases to 58.2 after October’s 1.3-pt. drop to 58.1.
The U.S. ISM Services PMI fell to 52.1 in November after a 1.1-point increase to 56.0 in October, according to today’s report by the Institute for Supply Management, indicating expansion in the services sector for the fifth consecutive month, in nine of 11 months in 2024, and for the 51st time in 54 months. The November index was up from a four-year-low 48.8 in June and a low of 49.0 in December 2022 but down from 52.5 in November 2023 and a record-high 67.1 in November 2021. The 12-month average was 52.2, reflecting strong growth in the U.S. services sector. The Action Economics Forecast Survey had expected 55.6 for November.
Haver Analytics constructs a composite index combining the services index and the manufacturing reading. This index dropped to 51.6 in November after a 0.9-point increase to 54.8 in October, showing expansion for the sixth time in seven months. The latest figure was higher than a four-year-low 48.8 in June and a low of 48.9 in December 2022 but down from 51.8 in November 2023 and a record-high 66.3 in November 2021. These series date back to July 1997.
In the latest services survey, the business activity index fell to 53.7 in November after declining to 57.2 in October, indicating business activity expanded for the fifth successive month and for the 53rd time in 54 months. The index was up from its recent low of 49.6 in June but below a record-high 69.5 in November 2021. An increased 24.4% of respondents (NSA) reported higher activity in November while 12.8% reported an activity decline. The new orders index slid to 53.7 in November after falling to 57.4 in October, indicating expansion in new orders for the fifth straight month and for the 52nd time in 54 months. The index was up from its recent low of 47.3 in June but down from a record-high 69.5 in October 2021. An increased 24.9% of respondents (NSA) reported higher orders in November while 13.8% reported a decline. Meanwhile, the supplier deliveries index (NSA) dropped to 49.5 in November from 56.4 in October, indicating faster supplier delivery performance after two months in slower territory.
On the labor front, the employment index fell to 51.5 in November after a 4.9-point rebound to 53.0 in October, showing employment activity in the services sector expanded for the fourth time in five months. The latest reading, while above a low of 43.8 in December 2023, was below a high of 54.1 in August 2023 and a high of 58.3 in April 2021. Fourteen percent of respondents (NSA) indicated higher employment in November while 12.2% reported a decline.
On the inflation front, the prices index inched up to 58.2 in November after a 1.3-point drop to 58.1 in October, indicating prices paid by services organizations for materials and services had risen (i.e., above 50) since June 2017. The index was up versus its recent low of 53.4 in March and a low of 54.8 in June 2023; however, having remained significantly below a record-high 83.8 in March 2022. Approximately nineteen percent of respondents (NSA) reported price rises in November while 5.6% reported price declines.
Additionally, the new export orders index decreased to 49.6 in November following a 5.0-point decline to 51.7 in October, indicating new export orders contracted for the first time since April. The imports index rebounded to 53.8 in November from 50.2 in October, registering the fifth consecutive month of expansion and at the fastest pace since February. The inventories index plunged to 45.9 in November after falling to 57.2 in October, indicating inventories contracted for the first time since July. The inventory sentiment index rose to 54.6 in November after declining to 53.0 in October, showing continued expansion since May 2023 and at the fastest rate in three months. The backlog of orders index fell to 47.1 in November from 47.7 in October, posting the fifth contraction in six months. These series are not seasonally adjusted and not included in the ISM Services PMI total.
The ISM Services PMI is a composite index consisting of four equally weighted diffusion indexes (25% each): Business Activity, New Orders, Employment, and Supplier Deliveries. A reading above 50 indicates expansion in the services sector; below 50 suggests contraction. Supplier Deliveries is the only ISM index that is inversed; a reading above 50 indicates slower deliveries. The ISM figures are available in Haver's USECON database, with additional detail in the SURVEYS database. The expectations figure from Action Economics is in the AS1REPNA database.
Winnie Tapasanun
AuthorMore in Author Profile »Winnie Tapasanun has been working for Haver Analytics since 2013. She has 20+ years of working in the financial services industry. As Vice President and Economic Analyst at Globicus International, Inc., a New York-based company specializing in macroeconomics and financial markets, Winnie oversaw the company’s business operations, managed financial and economic data, and wrote daily reports on macroeconomics and financial markets. Prior to working at Globicus, she was Investment Promotion Officer at the New York Office of the Thailand Board of Investment (BOI) where she wrote monthly reports on the U.S. economic outlook, wrote reports on the outlook of key U.S. industries, and assisted investors on doing business and investment in Thailand. Prior to joining the BOI, she was Adjunct Professor teaching International Political Economy/International Relations at the City College of New York. Prior to her teaching experience at the CCNY, Winnie successfully completed internships at the United Nations. Winnie holds an MA Degree from Long Island University, New York. She also did graduate studies at Columbia University in the City of New York and doctoral requirements at the Graduate Center of the City University of New York. Her areas of specialization are international political economy, macroeconomics, financial markets, political economy, international relations, and business development/business strategy. Her regional specialization includes, but not limited to, Southeast Asia and East Asia. Winnie is bilingual in English and Thai with competency in French. She loves to travel (~30 countries) to better understand each country’s unique economy, fascinating culture and people as well as the global economy as a whole.
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