Economic activity in the services sector grew in November for the 18th month in a row, with the Services PMI setting a record for the fifth time in 2021 and retail gaining.
Polled by the Institute for Supply Management, purchasing and supply executives in the United States said, as part of the Services ISM Report On Business, they anticipated strong ongoing demand.
In a report issued by ISM, chair Anthony Nieves said, “In November, the Services PMI registered another all-time high of 69.1%, 2.4 percentage points above October’s reading of 66.7%, the former all-time high. Previous records were set in March, 63.7%, May, 64% and July, 64.1%. The data quickly explains the elevated Services PMI reading, as two of the four equally weighted subindexes directly factor into the composite index set or tied all-time highs. The Business Activity Index reached 74.6%, an increase of 4.8 percentage points compared to the reading of 69.8% in October, and the New Orders Index registered 69.7%, the same reading as last month’s figure.”
The other two subindexes are Employment and Supplier Deliveries and both also contributed positively to the Services PMI for November. The Supplier Deliveries Index registered 75.7% in November, the same reading as in October, with the all-time high being 78.3%, recorded in April 2020. Supplier Deliveries is the only ISM Report On Business index that is inverse as a reading of above 50% indicates slower deliveries, which is the typical result as an economy improves and consumer demand increases.
“Demand continues to be strong, reflected by two other subindexes in November,” Nieves said. “The Backlog of Orders Index registered 65.9%, 1.4 percentage points lower than October’s all-time high reading of 67.3%. The Prices Index reached its third-highest reading ever at 82.3%, down 0.6 of a percentage point from the October figure of 82.9%. Services businesses continue to struggle to replenish inventories, as the Inventories Index, 48.2%, up six percentage points from October’s reading of 42.2%, and the Inventory Sentiment Index, an all-time low of 36.4%, down 0.9 percentage of a point from the previous month’s figure of 37.3%, stayed in contraction or ‘too low’ territory in November.”
Nieves pointed out that all 18 services industries ISM covers reported growth.
“The composite index indicated growth for the 18th consecutive month after a two-month contraction in April and May 2020. In November, record growth continued for the services sector, which has expanded for all but two of the last 142 months. Demand continues to outpace supply that has been impacted by capacity constraints, shortages of labor and materials, and logistical challenges. This has also caused demand-pull inflation that is affecting overall business conditions.”
All 18 services industries reported growth in November. Listed in growth order, they are Real Estate, Rental & Leasing; Transportation & Warehousing; Retail Trade; Agriculture, Forestry, Fishing & Hunting; Management of Companies & Support Services; Utilities; Wholesale Trade; Mining; Public Administration; Construction; Health Care & Social Assistance; Arts, Entertainment & Recreation; Other Services; Professional, Scientific & Technical Services; Finance & Insurance; Information; Educational Services, and Accommodation & Food Services.
