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ISM Shows Pickup In Services Activity, But Overshadowed By Jobs Data

US DATA

November's ISM Services report came in better than expected across the headline figure and subcategories - with the notable exception of Employment.

  • The Services PMI accelerated to 52.7 (52.3 expected, 51.8 prior), with new orders steady at 55.5 (54.9 expected, 55.5 prior), and prices paid dipping to 58.3 (58.0 expected, 58.6 prior).
  • The Employment gauge improved from October but failed to beat consensus at 50.7 (51.4 expected, 50.2 prior). That reading - when taken in conjunction with a much sharper-than-expected drop in JOLTS job openings data released concurrently - probably helped trigger a softening in US rates, in the context of Friday's November nonfarm payrolls report.
  • But overall the report provided evidence that activity in the crucial Services sector remains healthy, and is even potentially accelerating going into year-end, in stark contrast to last week's poor ISM Manufacturing report which missed expectations and showed all major components in contraction.
  • All categories apart from supplier deliveries (indicating that supplier delivery performance was ‘faster’ in contrast to the ‘slowing’ status in September.) and backlogs were above 50.0 (respondents commented: “Due to supply chain improvement, backlogs are under control” and “Suppliers are making good progress clearing up back orders.”).
  • 15 industries reported growth, with 3 (information, mining, professional/scientific/technical services) reporting a decline.
  • Even the softer rise in employment than had been expected may be due in part to continued supply-side constraints - the proportion seeing "lower" employment fell to a 3-month low 13.8% , though the proportion seeing "higher" activity remains fairly stagnant, with the vast majority seeing "same".
  • Anecdotally: “We have lost employees due to normal attrition and are having issues backfilling these positions” and “The labor market remains very competitive.” Also: “Trying to get to full staff levels.”

  • Source: ISM, MNI


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November's ISM Services report came in better than expected across the headline figure and subcategories - with the notable exception of Employment.

  • The Services PMI accelerated to 52.7 (52.3 expected, 51.8 prior), with new orders steady at 55.5 (54.9 expected, 55.5 prior), and prices paid dipping to 58.3 (58.0 expected, 58.6 prior).
  • The Employment gauge improved from October but failed to beat consensus at 50.7 (51.4 expected, 50.2 prior). That reading - when taken in conjunction with a much sharper-than-expected drop in JOLTS job openings data released concurrently - probably helped trigger a softening in US rates, in the context of Friday's November nonfarm payrolls report.
  • But overall the report provided evidence that activity in the crucial Services sector remains healthy, and is even potentially accelerating going into year-end, in stark contrast to last week's poor ISM Manufacturing report which missed expectations and showed all major components in contraction.
  • All categories apart from supplier deliveries (indicating that supplier delivery performance was ‘faster’ in contrast to the ‘slowing’ status in September.) and backlogs were above 50.0 (respondents commented: “Due to supply chain improvement, backlogs are under control” and “Suppliers are making good progress clearing up back orders.”).
  • 15 industries reported growth, with 3 (information, mining, professional/scientific/technical services) reporting a decline.
  • Even the softer rise in employment than had been expected may be due in part to continued supply-side constraints - the proportion seeing "lower" employment fell to a 3-month low 13.8% , though the proportion seeing "higher" activity remains fairly stagnant, with the vast majority seeing "same".
  • Anecdotally: “We have lost employees due to normal attrition and are having issues backfilling these positions” and “The labor market remains very competitive.” Also: “Trying to get to full staff levels.”

  • Source: ISM, MNI