US services sector accelerates in November: ISM

The US services sector saw growth accelerate at the fastest pace in over a year in November as employment and export orders rose, the Institute for Supply Management (ISM) reported on Monday.

The ISM`s Non-Manufacturing Index jumped 2.4 points, erasing the decline in the prior month, to hit the highest level since October 2015 at 57.2. The sector is the major driver of the US economy and has been growing for 82 consecutive months, indicated by a reading above 50.

The report showed 14 of the sectors surveyed showed growth in the month, while just two reported contraction: real estate, rental and leasing, and public administration.

While ISM said most of the comments from service industry contacts were positive, there remain signs of concern in some sectors.

"Our health plan business still continues to struggle with rising costs under Obamacare, which is causing the whole company to experience cost pressures," said one.

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And another from the mining industry said, "Current business conditions continue to be depressed more than desired; although, there appears to be slight improvement. As our business is primarily driven by the oil and gas market, we follow the price of oil fairly close." 

Still, the subcomponents of the index show broad strength. The employment index jumped to 58.2 from 53.1 in the prior month, which was the highest reading since October 2015, with 11 industries reporting increased hiring and only five reporting job cuts.

New orders dipped slightly but remained strong at 57.0, with a single industry -- wholesale trade -- reporting a drop in orders. New export orders rose 1.5 points to 57.0, the third consecutive increase, while prices paid fell slightly to 56.3.

The ISM`s manufacturing index for November released last week showed the sector also accelerated to the fastest pace since June as the index rose to 53.2.