U.S. services sector continued to expand through November

U.S. services activity continued to expand in November, albeit at a slower pace, as demand slowed and firms registered concerns about the consequences of President-elect Donald Trump’s policies, including promised tariffs. The Institute for Supply Management’s index of services dropped 3.9 points, the first decline since June, to 52.1, remaining above the 50-mark separating expansion from contraction, but well below the 55.6 expected by economists polled by the Wall Street Journal. All four of the main gauges that make up the indicator drove the decrease—weaker business activity, new orders and employment alongside shorter supplier deliveries—according to Steve Miller, chair of ISM. However, most sectors reported business-activity growth, reinforcing the view of recent months that the services sector has returned to sustained growth, despite some seasonal impacts, he said. “Not surprisingly, election ramifications and tariffs were mentioned often, with cautionary outlooks related to the potential impact on respondents’ specific industries,” he added. A separate measure, the S&P Global U.S. Composite PMI, was revised down to 54.9 from the 55.3 preliminary estimate. However, the figure, rising from 54.1 in October, marked a 31-month high for the gauge of economic activity. The Services PMI was also revised lower, to 56.1. “Improved service sector output offset a further decline in manufacturing during November, helping drive the overall pace of growth of business activity to the fastest for over two and a half years,” said Chris Williamson, chief business economist at S&P Global Market Intelligence.