MNI INTERVIEW: ISM Services Will Continue To See Improvement
U.S. services activity expanded at a slightly faster pace in November, and there are signs that mild growth will continue as demand holds up, Institute for Supply Management services chair Steve Miller told MNI Wednesday.
Business activity, new orders, and supplier deliveries indexes are all above their 12-month average, and the services PMI has shown a positive trend since May, he said.
"I feel pretty positive about where we're headed," Miller said. "Looking at the trends together – and the more aggregation the better – gives you a pretty good signal for where things are going."
The ISM composite increased 0.2 to 52.6 last month, above market expectations and the highest since February. The prices paid index fell 4.6 to 65.4, the lowest since April and below its 12-month average.
GRADUAL IMPROVEMENT
The new orders index fell 3.3 to 52.9 and the supplier deliveries index jumped 3.3 to 54.1, representing slower performance and the second highest reading since October 2022.
"I'm a little more confident in a gradual improvement from all of the uncertainty this summer, seeing an ongoing trend of improvement since May," Miller said. "This gave me good confidence that we're seeing a back-to-business kind of mentality, even with the uncertainty on the Supreme Court."
"We've got some consistency in new orders being above 50 for the last six months. And the backlog of orders, despite being in the 40s for two out of the last four months, is a gradual trend increase since the May timeframe."
The employment index rose 0.7 to 48.9 in the month to its highest reading since May, though remained in contraction territory for the sixth month in a row.
"I would say there's positive signs in the services economy, growth returning, and – without a significant negative – that employment number will continue to kind of hover around 50," Miller said, citing a lack of commentary among survey participants on significant layoffs.
"There just aren't more people to take out without a signal that the economy is in the tank," Miller said. (See: MNI INTERVIEW: Fed To Slow Easing, '26 Cuts Not Certain-Clouse)
SUPPLIER DELIVERIES
A rise in supplier deliveries, reflecting the disruptions to air travel due to the government shutdown, boosted the November ISM services PMI. Without that, the gauge might have seen a small monthly drop, Miller said.
"We'd be at about 51.8 on the overall services PMI number if we come in the same as last month on supplier deliveries, which would be representative of the disruptions," he said. "It was only a partial month of disruption, so it would have probably been somewhere in the 52.0 area, maybe a little bit above 52."
