Services Sector Continues to Grow in November Despite Demand Pressure, ISM, S&P Surveys Show

01:32 PM EST, 12/03/2025 (MT Newswires) -- The US services sector remained in growth territory last month, two surveys showed Wednesday, though there were some signs of demand pressure.

The Institute for Supply Management's purchasing managers' index ticked higher at 52.6 last month, the highest reading since February, from 52.4 in October. The consensus was for a 52 print in a survey compiled by Bloomberg. A reading above 50 indicates the services sector economy is generally expanding.

The gauge for business activity rose to 54.5, the highest in three months, from 54.3 in October, ISM data showed. New orders growth slowed to 52.9 from 56.2.

"The continued expansion in both the business activity and new orders indexes in November, and the highest backlog of orders index reading since February 2025 are positive signs of an emerging recovery for the services sector," said Steve Miller, chair of the ISM's services business survey committee.

"On the downside, tariffs and the government shutdown continue to be noted by survey respondents as impacting both demand and costs."

The gauge for employment contracted for the sixth straight month, though the pace of decline improved. The ISM's measure for prices dropped by 4.6 points to 65.4 in November, the lowest since April.

"Perhaps the most significant development in this report is the decline in the prices index, which could help give the Federal Reserve some confidence that price pressures remain manageable," Vikram Rai, senior economist at TD Economics, said in a report. "It seems competition is a factor as respondents expect to see margins decline to compete for business, which would lead to lower price increases."

Separately, S&P Global (SPGI) said that its services PMI gauge dropped to 54.1 in November from October's 54.8. The print marked the lowest reading since June. The consensus was for a 55 reading.

"Consumer and business services are also continuing to expand, but report pressure on customer demand from affordability issues in particular," S&P Global Market Intelligence Chief Business Economist Chris Williamson said. "Worryingly, prices charged for services rose at an increased rate in November as firms sought to pass on higher costs, in turn often linked to tariffs."

Still, demand for services rose at the fastest rate seen so far this year, Williamson said.

On Monday, ISM data showed continued contraction in the US manufacturing sector, while an S&P Global (SPGI) report indicated slight deceleration in growth.

"Together with a robust increase in output reported by the manufacturing sector, the survey indicates that the economy is so far expanding at a 2.5% annualized GDP growth rate in the fourth quarter," Williamson said.

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