U.S. ISM Services Index Increases in November; Price Index Declines
by:Tom Moeller
|in:Economy in Brief
Summary
- Total services index is highest in nine months.
- Business activity, employment & supplier deliveries increase.
- Prices index declines sharply.
Business in the service sector improved last month. The Services Purchasing Managers Composite Index increased to 52.6 during November after improving to 52.4 in October, following a decline to 50.0 in September, according to the Institute for Supply Management (ISM). The index hit a recent high of 55.8 in October of last year but remains below the all-time high of 67.5 in November 2021. The Action Economics Forecast Survey expected a reading of 52.5 in November.
The ISM Composite Index, developed by Haver Analytics, combines the services index and the ISM manufacturing index released on Monday. This index edged up to 52.1 in November from 52.0 October. It was the highest level since February.
Most components of the services index increased last month. Strengthening to a three-year high, the supplier delivery series jumped to 54.1 in November after falling to 50.8 in October. An increased 4.5% of respondents (NSA) reported faster delivery speeds while a much higher 12.6% reported slower speeds. The business activity index rose to 54.5 last month after increasing to 54.3 in October. It remained below its high of 70.9 in both October & November of 2021. Twenty-five percent (NSA) of respondents reported improved activity while 16.9% reported decline. Also working higher, the employment series rose to 48.9, its highest level in six months, after rising to 48.2 in October. A higher 15.6% (NSA) of respondents reported increased employment while 18.5% reported declines. Moving lower, the new orders index declined to 52.9 after surging to 56.2 in October. Twenty-four percent (NSA) of respondents reported improved orders while a 16.6% reported decline.
On the inflation front, the prices index declined to 65.4 last month after surging to 70.0 in October. The index was at the lowest point since April. A greatly lessened 31.0% (NSA) of respondents reported higher prices while 4.4% reported lower prices.
Additionally, the new export orders index rose to 48.7 (NSA) in November following a rise to 47.8 in October. A lessened 11.2% of survey respondents reported higher exports while a reduced 13.8% reported decline. The imports index rose to 48.9 last month after falling to 43.7 in October. A higher 12.3% of respondents reported higher imports while a lessened 14.6% reported decline. The inventory change index rose to 53.4 after rising to 49.5 and the order backlog index rose sharply to 49.1 and reversed its October decline. 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: Business Activity, New Orders, Employment, and Supplier Deliveries. A reading above 50 indicates expansion in the services sector, while 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.
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
More Economy in Brief
