Services PMI? at 52.1%; November 2024 Services ISM? Report On Business?

Business Activity Index at 53.7%;?New Orders Index at 53.7%;?Employment Index at 51.5%; Supplier Deliveries Index at 49.5%

TEMPE, Ariz., Dec. 4, 2024 /PRNewswire/ -- Economic activity in the services sector?expanded for the fifth consecutive month in November, say the nation's purchasing and supply executives in the latest Services ISM^? Report On Business^?. The Services PMI^? registered 52.1 percent, indicating expansion for the 51st time in 54 months since recovery from the coronavirus pandemic-induced recession began in June 2020.

The report was issued today by Steve Miller, CPSM, CSCP, Chair of the Institute for Supply Management^? (ISM^?) Services Business Survey Committee: "In November, the Services PMI^??registered 52.1 percent, 3.9 percentage points lower than October's figure of 56 percent. The reading in November marked the ninth time the composite index has been in expansion territory this year. The Business Activity Index registered 53.7 percent in November, 3.5 percentage points lower than the 57.2 percent recorded in October, indicating a fifth month of expansion after a contraction in June. The New Orders Index also recorded a reading of 53.7 percent in November, 3.7 percentage points lower than October's figure of 57.4 percent. The Employment Index landed in expansion territory for the fourth time in five months; the reading of 51.5 percent is a 1.5-percentage point decrease compared to the 53 percent recorded in October.

"The Supplier Deliveries Index registered 49.5 percent, 6.9 percentage points lower than the 56.4 percent recorded in October. The index was in contraction territory for the sixth time in 2024 ? indicating faster supplier delivery performance ? after two months in expansion or 'slower' territory. (Supplier Deliveries is the only ISM^? Report On Business^? index that is inversed; a reading of above 50 percent indicates slower deliveries, which is typical as the economy improves and customer demand increases.)

"The Prices Index registered 58.2 percent in November, a 0.1-percentage point increase from October's reading of 58.1 percent. The Inventories Index returned to contraction territory in November after three months in expansion, registering 45.9 percent, a decrease of 11.3 percentage points from October's figure of 57.2 percent. The Inventory Sentiment Index expanded for the 19th consecutive month, registering 54.6 percent, up 1.6 percentage points from October's reading of 53 percent. The Backlog of Orders Index remained in contraction territory for a fourth consecutive month, registering 47.1 percent in November, a 0.6-percentage point decrease from the October reading of 47.7 percent.

"Fourteen industries reported growth in November, matching the previous month's total. The Services PMI^? has expanded in 21 of the last 23 months dating back to January 2023, and the November reading is 0.2 percentage point below its average of 52.3 percent for 2024."

Miller continues, "The decrease in the Services PMI^? in November was driven by decreases in each of the four directly impacting subindexes (Business Activity, New Orders, Employment and Supplier Deliveries). However, 14 industries reported business activity growth, and 13 indicated new orders expansion; both figures are improvements compared to October. This reinforces the view over the last several months that the services sector has returned to sustained growth. Generally, respondents' comments were neutral to positive, and both positive and negative impacts were attributed to seasonality. Not surprisingly, election ramifications and tariffs were mentioned often, with cautionary outlooks related to the potential impact on respondents' specific industries."

INDUSTRY PERFORMANCE
The 14 services industries reporting growth in November ? listed in order ? are: Accommodation & Food Services; Arts, Entertainment & Recreation; Health Care & Social Assistance; Wholesale Trade; Agriculture, Forestry, Fishing & Hunting; Public Administration; Finance & Insurance; Management of Companies & Support Services; Retail Trade; Transportation & Warehousing; Information; Professional, Scientific & Technical Services; Construction; and Utilities. The three industries reporting a contraction in the month of November are:?Mining; Real Estate, Rental & Leasing; and Educational Services.

WHAT RESPONDENTS ARE SAYING

• "Federal Reserve interest rate cuts have not had the desired effect on mortgage rates yet. With election results mostly determined, expansion of residential construction is anticipated, but the unknown effect of tariffs clouds the future." [Construction]
• "All operations are normal at the moment. Nothing local or national that is having any major effect on our operations." [Educational Services]
• "Higher level of activity is driving the need for additional resources." [Finance & Insurance]
• "We have concern after the presidential election that tariffs will affect prices for electronics and components in 2025." [Information]
• "Domestic lead times still seem very long. We are having to go to China for many electrical equipment requirements. Even after tariffs, the price is half, and so are the lead times." [Management of Companies & Support Services]
• "Election results and the potential tariff changes would impact inventory and lead to higher prices in the hospital supply chain. What we saw during COVID-19 with startup U.S. production is a warning sign again." [Professional, Scientific & Technical Services]
• "Construction materials are shorted or hard to get due to increased construction projects in the area and (in the) U.S. Sometimes projects are delayed due to this." [Public Administration]
• "We finished a solid quarter and are planning on a similar holiday period. Not breaking any records, but positive." [Retail Trade]
• "Still waiting to see how presidential cabinet picks shake out, if they are confirmed and how they will affect our operations going forward. Holding capital projects now until the cabinet is complete and we know how federal funds will be dispersed going forward." [Transportation & Warehousing]
• "Even though we are reducing our spending and our employment levels, we have a positive outlook for 2025 performance with expected reinvestment of funds." [Utilities]

Services?ISM^? Report On Business^? data is seasonally adjusted for the Business Activity, New Orders, Employment and Prices indexes. Manufacturing ISM^? Report On Business^? data is seasonally adjusted for New Orders, Production, Employment and Inventories indexes.

*Number of months moving in current direction.

COMMODITIES REPORTED UP/DOWN IN PRICE, AND IN SHORT SUPPLY

Commodities Up in Price
Aluminum Products; Diesel Fuel*; Electrical Components; Labor (48); Labor ? Skilled; Lumber (3); Maintenance Services; and Propane.

Commodities Down in Price
Computers; Diesel Fuel* (2); Fuel (3); and Steel Products.

Commodities in Short Supply
Appliances; Construction Contractors (2); Electrical Equipment (6); IV Irrigation; IV Solutions (2); Switchgear; and Transformers (6).

Note: The number of consecutive months the commodity is listed is indicated after each item.
*Indicates both up and down in price.

NOVEMBER?2024 SERVICES INDEX SUMMARIES

Services PMI^?
In November, the Services PMI^? registered 52.1 percent, a 3.9-percentage point decrease compared to the October reading of 56 percent, and 0.1 percentage point below the 12-month average. A reading above 50 percent indicates the services sector economy is generally expanding; below 50 percent indicates it is generally contracting.

A Services PMI^? above 49 percent, over time, generally indicates an expansion of the overall economy.?Therefore, the November Services PMI^? indicates the overall economy is expanding for the fifth straight month.?Miller says, "The past relationship between the Services PMI^? and the overall economy indicates that the Services PMI^? for November (52.1 percent) corresponds to a 1-percentage point increase in real gross domestic product (GDP) on an annualized basis."

SERVICES PMI^??HISTORY

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Business Activity
ISM^?'s Business Activity Index registered 53.7 percent in November, 3.5 percentage points lower than the 57.2 percent recorded in October, a fifth month of expansion after contracting in June for the first time since May 2020. The Business Activity Index has been in expansion territory for 53 out of the 54 months since its coronavirus pandemic lows. Comments from respondents include: "Normal business activity as we prepare for our busy season in the first quarter of 2025" and "Tough agriculture economy."

The 14 industries reporting an increase in business activity for the month of November ? listed in order ? are: Arts, Entertainment & Recreation; Accommodation & Food Services; Finance & Insurance; Information; Retail Trade; Health Care & Social Assistance; Public Administration; Agriculture, Forestry, Fishing & Hunting; Transportation & Warehousing; Wholesale Trade; Management of Companies & Support Services; Professional, Scientific & Technical Services; Educational Services; and Utilities. The two industries reporting a decrease in business activity for the month of November are: and Real Estate, Rental & Leasing; and Other Services.

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New Orders
ISM^?'s New Orders Index registered 53.7 percent in November, 3.7 percentage points lower than the reading of 57.4 percent registered in October. The index was in expansion for the fifth consecutive month after contracting in June for just the second time since May 2020. Comments from respondents include: "End of calendar-year elective procedures for insurance/medical savings accounts" and "We are already seeing some end-of-year softness."

The 13 industries reporting an increase in new orders for the month of November ? listed in order ? are:?Arts, Entertainment & Recreation; Accommodation & Food Services; Management of Companies & Support Services; Public Administration; Information; Wholesale Trade; Retail Trade; Agriculture, Forestry, Fishing & Hunting; Health Care & Social Assistance; Professional, Scientific & Technical Services; Finance & Insurance; Transportation & Warehousing; and Utilities. The three industries reporting a decrease in new orders for the month of November are: Mining; Real Estate, Rental & Leasing; and Educational Services.

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Employment
Employment activity in the services sector expanded in November for the second consecutive month after a contraction in September. The Employment Index registered 51.5 percent, down 1.5 percentage points from the October figure of 53 percent. Comments from respondents include: "Actively filling open positions" and "Hiring freeze in place; not backfilling positions as people retire or leave the company."

The five industries reporting an increase in employment in November are: Accommodation & Food Services; Wholesale Trade; Other Services; Construction; and Transportation & Warehousing. The five industries reporting a decrease in employment in November are: Educational Services; Information; Utilities; Public Administration; and Professional, Scientific & Technical Services. Eight industries reported no change in employment.

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Supplier Deliveries
In November, the Supplier Deliveries Index indicated faster performance for the first time in three months. The index registered 49.5 percent, down 6.9 percentage points from the 56.4 percent recorded in October. A reading above 50 percent indicates slower deliveries, while a reading below 50 percent indicates faster deliveries. Comments from respondents include: "Materials and components more readily available to our manufacturers" and "Many items are on allocation and are being substituted."

The six industries reporting slower deliveries in November ? in the following order ? are: Accommodation & Food Services; Health Care & Social Assistance; Agriculture, Forestry, Fishing & Hunting; Public Administration; Educational Services; and Utilities. The four industries reporting faster supplier deliveries for the month of November are: Real Estate, Rental & Leasing; Retail Trade; Wholesale Trade; and Information. Eight industries reported no change in supplier deliveries.

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Inventories
The Inventories Index returned to contraction territory for the first time in four months. The reading of 45.9 percent?is an 11.3-percentage point decrease compared to the 57.2 percent reported in October. Of the total respondents in November, 51 percent indicated they do not have inventories or do not measure them. Comments from respondents include: "Due to unpredictable supply of IV bags, the hospital's upper management decided to increase inventory stock to cover for possible new shortages" and "Reducing new inventory purchasing to close inventory levels lower at year's end."

The four industries reporting an increase in inventories in November are: Transportation & Warehousing; Construction; Professional, Scientific & Technical Services; and Health Care & Social Assistance. The six industries reporting a decrease in inventories in November ? in the following order ? are: Real Estate, Rental & Leasing; Other Services; Management of Companies & Support Services; Retail Trade; Wholesale Trade; and Utilities. Eight industries reported no change in inventories in November as compared to October.

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Prices
Prices paid by services organizations for materials and services increased in November for the 90th consecutive month. The Prices Index registered 58.2 percent, 0.1 percentage point higher than the 58.1 percent recorded in October. The November reading is the 25th in a row below 70 percent, including 19 of the last 20 months at or below 60 percent. Before that, from September 2021 to June 2022, there were 10 straight months of readings near or above 80 percent.

Fourteen of the 18 services industries reported an increase in prices paid during the month of November, in the following order: Mining; Arts, Entertainment & Recreation; Construction; Other Services; Finance & Insurance; Health Care & Social Assistance; Educational Services; Utilities; Information; Retail Trade; Professional, Scientific & Technical Services; Public Administration; Wholesale Trade; and Management of Companies & Support Services. The only industry reporting a decrease in prices paid in November is Agriculture, Forestry, Fishing & Hunting.

NOTE: Commodities reported as up in price and down in price are listed in the commodities section of this report.

Backlog of Orders
The ISM^? Services Backlog of Orders Index contracted in November for the fourth month in a row and the sixth time in 2024. The reading of 47.1 percent?is 0.6 percentage point lower than the 47.7 percent reported in October. Of the total respondents in November, 44 percent indicated they do not measure backlog of orders. Respondent comments include: "We are able to fulfill our orders with current warehouse stock" and "Capacity meeting backlog; slower future demand."

The five industries reporting an increase in order backlogs in November are: Utilities; Health Care & Social Assistance; Professional, Scientific & Technical Services; Finance & Insurance; and Wholesale Trade. The seven industries reporting a decrease in order backlogs in November ? in the following order ? are: Other Services; Real Estate, Rental & Leasing; Educational Services; Public Administration; Retail Trade; Management of Companies & Support Services; and Transportation & Warehousing. Six industries reported no change in order backlogs in November.

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New Export Orders
Orders and requests for services and other non-manufacturing activities to be provided outside of the U.S. by domestically based companies decreased in November for the first time in seven months and only the second time in the last 12 months. The New Export Orders Index registered 49.6 percent, a 2.1-percentage point decrease from the 51.7 percent reported in October. Of the total respondents in November, 75 percent indicated they do not perform, or do not separately measure, orders for work outside of the U.S. Respondent comments include: "As mentioned in previous months, new projects in emerging markets have provided the company with business opportunities, while projects in the U.S. have remained steady" and "Demand from Central America."

The seven industries reporting an increase in new export orders in November ? in the following order ? are: Finance & Insurance; Wholesale Trade; Management of Companies & Support Services; Transportation & Warehousing; Utilities; Information; and Professional, Scientific & Technical Services. The three industries reporting a decrease in new export orders in November are: Retail Trade; Other Services; and Mining. Eight industries reported no change in new export orders in November.

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Imports
The Imports Index expanded for the fifth consecutive month in November, registering 53.8 percent, 3.6 percentage points higher than the 50.2 percent reported in October. The index has indicated expansion in 22 of the last 27 months, with contractions in May and June of this year, March and December 2023, and an "unchanged" status (a reading of 50 percent) in May 2023. Sixty-three percent of respondents reported that they do not use, or do not track the use of, imported materials. Respondent comments include: "IV fluid shortages" and "The fourth quarter is traditionally the busiest time of the year for our organization."

The eight industries reporting an increase in imports for the month of November ? in the following order ? are: Accommodation & Food Services; Wholesale Trade; Educational Services; Management of Companies & Support Services; Health Care & Social Assistance; Information; Utilities; and Professional, Scientific & Technical Services. No industry reported a decrease in imports in November. Ten industries reported no change in imports in November.

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Inventory Sentiment
The ISM^? Services Inventory Sentiment Index grew for the 19th consecutive month in November after one month of contraction in April 2023. The index registered 54.6 percent, a 1.6-percentage point increase from October's figure of 53 percent. This reading indicates that respondents feel their inventories are too high when correlated to industry levels.

The nine industries reporting sentiment that their inventories were too high in November ? listed in order ? are: Arts, Entertainment & Recreation; Mining; Wholesale Trade; Utilities; Retail Trade; Construction; Public Administration; Educational Services; and Information. The two industries reporting feeling that their inventories were too low in November are: Management of Companies & Support Services; and Agriculture, Forestry, Fishing & Hunting. Seven industries reported no change in November.

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About This Report
DO NOT CONFUSE THIS NATIONAL REPORT with the various regional purchasing reports released across the country. The national report's information reflects the entire U.S., while the regional reports contain primarily regional data from their local vicinities. Also, the information in the regional reports is not used in calculating the results of the national report. The information compiled in this report is for the month of November 2024.

The data presented herein is obtained from a survey of supply executives in the services sector based on information they have collected within their respective organizations. ISM^? makes no representation, other than that stated within this release, regarding the individual company data collection procedures. The data should be compared to all other economic data sources when used in decision-making.

Data and Method of Presentation
The Services?ISM^? Report On Business^? (formerly the Non-Manufacturing ISM^? Report On Business^?) is based on data compiled from purchasing and supply executives nationwide. Membership of the Services Business Survey Panel (formerly Non-Manufacturing Business Survey Committee) is diversified by NAICS, based on each industry's contribution to gross domestic product (GDP). The Services Business Survey Panel responses are divided into the following NAICS code categories: Agriculture, Forestry, Fishing & Hunting; Mining; Utilities; Construction; Wholesale Trade; Retail Trade; Transportation & Warehousing; Information; Finance & Insurance; Real Estate, Rental & Leasing; Professional, Scientific & Technical Services; Management of Companies & Support Services; Educational Services; Health Care & Social Assistance; Arts, Entertainment & Recreation; Accommodation & Food Services; Public Administration; and Other Services (services such as Equipment & Machinery Repairing; Promoting or Administering Religious Activities; Grantmaking; Advocacy; and Providing Dry-Cleaning & Laundry Services, Personal Care Services, Death Care Services, Pet Care Services, Photofinishing Services, Temporary Parking Services, and Dating Services). The data are weighted based on each industry's contribution to GDP. According to BEA estimates (the average of the fourth quarter 2022 GDP estimate and the GDP estimates for first, second, and third quarter 2023, as released on December 21, 2023), the six largest services sectors are: Real Estate, Rental & Leasing; Public Administration; Professional, Scientific, & Technical Services; Health Care & Social Assistance; Information; and Finance & Insurance.

Survey responses reflect the change, if any, in the current month compared to the previous month. For each of the indicators measured (Business Activity, New Orders, Backlog of Orders, New Export Orders, Inventory Change, Inventory Sentiment, Imports, Prices, Employment and Supplier Deliveries), this report shows the percentage reporting each response and the diffusion index. Responses represent raw data and are never changed. Data is seasonally adjusted for Business Activity, New Orders, Prices and Employment. All seasonal adjustment factors are subject annually to relatively minor changes when conditions warrant them. The remaining indexes have not indicated significant seasonality.

The Services PMI^? is a composite index based on the diffusion indexes for four of the indicators with equal weights: Business Activity (seasonally adjusted), New Orders (seasonally adjusted), Employment (seasonally adjusted) and Supplier Deliveries. Diffusion indexes have the properties of leading indicators and are convenient summary measures showing the prevailing direction of change and the scope of change. An index reading above 50 percent indicates that the services economy is generally expanding; below 50 percent indicates that it is generally declining. Supplier Deliveries is an exception. A Supplier Deliveries Index above 50 percent indicates slower deliveries and below 50 percent indicates faster deliveries.

A Services PMI^? above 49 percent, over time, indicates that the overall economy, or gross domestic product (GDP), is generally expanding; below 49 percent, it is generally declining. The distance from 50 percent or 49 percent is indicative of the strength of the expansion or decline.

The Services ISM^? Report On Business^? survey is sent out to Services Business Survey Panel respondents the first part of each month. Respondents are asked to ONLY report on U.S. operations for the current month. ISM^? receives survey responses throughout most of any given month, with the majority of respondents generally waiting until late in the month to submit responses to give the most accurate picture of current business activity. ISM^? then compiles the report for release on the third business day of the following month.

The industries reporting growth, as indicated in the Services ISM^? Report On Business^? monthly report, are listed in the order of most growth to least growth. For the industries reporting contraction or decreases, those are listed in the order of the highest level of contraction/decrease to the least level of contraction/decrease.

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About Institute for Supply Management^?
Institute for Supply Management^??(ISM^?) is the first and leading not-for-profit professional supply management organization worldwide. Its community of more than 50,000 in more than 100 countries manages about US$1 trillion in corporate and government supply chain procurement annually. Founded in 1915 by practitioners, ISM is committed to advancing the practice of supply management to drive value and competitive advantage for its members, contributing to a prosperous and sustainable world. ISM empowers and leads the profession through the ISM^? Report On Business^?, its highly regarded certification and training programs, corporate services, events, and assessments. The ISM^? Report On Business^?, Manufacturing, Services, and Hospital, are three of the most reliable economic indicators available, providing guidance to supply management professionals, economists, analysts, and government and business leaders. For more information, please visit: www.ismworld.org.

The full text version of the Services?ISM^? Report On Business^? is posted on ISM^?'s website at www.ismrob.org?on the third business day* of every month after 10:00 a.m. ET. The one exception is in January, the report is released on the fourth business day of the month.

The next Services?ISM^? Report On Business^? featuring December 2024 data will be released at 10:00 a.m. ET on Tuesday, January 7, 2025.

*Unless the New York Stock Exchange is closed.

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SOURCE Institute for Supply Management