(Kitco News) – The U.S. service sector strengthened last month with business activity improving and price pressures easing, but employment remained in contraction, according to the latest data from the Institute for Supply Management (ISM).
The ISM announced on Wednesday morning that its Services Purchasing Managers Index rose to 52.6 in November, up from October’s reading of 52.4. The data was better than expected, as economists were looking for a reading of 52.1.
Readings above 50 in such diffusion indexes signify economic growth and vice versa. The farther an indicator is above or below 50, the greater or smaller the rate of change. In September, the Services PMI reading of 50 percent was at the breakeven point between expansion and contraction for the first time since January 2010.
“The New Orders Index also remained in expansion in November, with a reading of 52.9 percent, 3.3 percentage points below October’s figure of 56.2 percent but 0.9 percentage point above its 12-month average of 51.7 percent,” said Steve Miller, chair of the Institute for Supply Management Services Business Survey Committee. “The Employment Index contracted for the sixth month in a row with a reading of 48.9 percent, a 0.7-percentage point improvement from the 48.2 percent recorded in October — the fourth consecutive monthly increase since a reading of 46.4 percent in July.”
After setting a double-top at $4,240 per ounce shortly after the North American open, gold prices were rising back from near flat on the session following the 10 am EDT release. Spot gold last traded at $4,214.63 per ounce for a gain of 0.21% on the daily chart.
“The Supplier Deliveries Index registered 54.1 percent, 3.3 percentage points higher than the 50.8 percent recorded in October and 2.2 percentage points above its 12-month average of 51.9 percent,” Miller said. “This is the 12th consecutive month that the index has been in expansion territory, indicating slower supplier delivery performance.
Price pressures also moderated last month, with the Prices Index registering 65.4 percent in November, its lowest level since the 65.1 percent reading in April 2025. “The November figure was a 4.6-percentage point drop from October’s reading of 70 percent,” he said. “The index has exceeded 60 percent for 12 straight months.”
“The Inventories Index registered 53.4 percent in November, an increase of 3.9 percentage points from October’s figure of 49.5 percent, a return to expansion after two months in contraction territory,” Miller said. “The Inventory Sentiment Index expanded for the 31st consecutive month, registering 54.8 percent, down 0.7 percentage point from October’s figure of 55.5 percent. The Backlog of Orders Index was in contraction territory for the ninth month in a row, registering 49.1 percent in November, an 8.3-percentage point increase from the October figure of 40.8 percent, and 3.8 percentage points above its 12-month average of 45.3 percent.
“Twelve industries reported growth in November, one more than in October, while the number reporting contraction decreased from six to five,” he added. “The November Services PMI reading of 52.6 percent is 0.9 percentage point above the 12-month average of 51.7 percent. However, the 12-month average continues at its lowest level since August 2024 (51.7 percent) for the second month in a row, and the second lowest since June 2010 (51.4 percent).”
“November’s Services PMI is a continuation of a downward trend (as noted in the October report) of more than 10 percentage points in the 12-month average since February 2022, when it was 62.6 percent,” Miller noted. “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.”
“On the downside, tariffs and the government shutdown continue to be noted by survey respondents as impacting both demand and costs”
