After reporting strong growth in the previous month, the Institute for Supply Management released a report on Thursday showing that the pace of growth in U.S. service sector activity slowed more than expected in November.
The ISM said its non-manufacturing index dropped to 55.9 in November from 59.1 in October. While a reading above 50 indicates continued growth in the service sector, economists had expected the index to show a more modest pullback to 58.2.
“According to the NMI, 12 non-manufacturing industries reported growth in November,” said Anthony Nieves, chair of the ISM Non-Manufacturing Business Survey Committee. “Most respondents are still positive about business conditions.”
The bigger than expected decrease by the headline index reflected notable decreases by the business activity, new orders, and employment indexes.
The business activity index slid to 58.2 in November from 63.0 in October, while the new orders fell to 57.5 from 62.0 and the employment index dropped to 55.0 from 59.2.
The readings above 50 continued to indicate expansion, although the decreases pointed to a slower rate of growth compared to the previous month.
Meanwhile, the report said the prices index rose to 50.3 in November from 49.1 in October, indicating prices increased in November after two consecutive months of contraction.
The supplier deliveries index also edged up to 53.0 in November from 52.0 in October, while the inventories index climbed to 54.5 from 52.5.
On Tuesday, the ISM released a separate report showing that activity in the U.S. manufacturing sector unexpectedly contracted for the first time in three years in November.
The ISM said its purchasing managers index dropped to 48.6 in November from 50.1 in October, while economists had expected the index to climb to a reading of 50.5.
The reading below 50 points to the first contraction in manufacturing activity since November of 2012, when the index registered 48.9 percent.
The material has been provided by InstaForex Company – www.instaforex.com