Economy Watch: Service-Sector Activity Slows a Bit, But Still Robust

The IHS Markit Business Activity Index was down a bit in November, IHS Market Ltd. recently reported, but the overall rate of economic growth is still strong.

Source: IHS Markit U.S. Services PMI™
Source: IHS Markit U.S. Services PMI™

The IHS Markit U.S. Services Business Activity Index came in at 54.5 in November, down from 55.3 in October, IHS Market Ltd. reported Nov. 5. Although the latest reading indicated a slightly weaker economic expansion, the overall rate of growth is still strong by recent standards, the company said.

Anecdotal evidence suggests that increases in economic activity were due to greater new order volumes and robust client demand. New orders received by service providers continued to rise in November, with the pace of expansion accelerating from October’s six-month low.

Beside an increase in new orders, firms reported that greater business requirements have led to employment growth. Job creation accelerated slightly to a rate that was the fastest in three months. Also, the latest upturn in payroll numbers was above the long-run series average, the report noted.

Average prices for services increased further in November, with the rate of inflation accelerating. The rise was due to higher input costs, which were passed on to clients. The increase in input costs was primarily due to higher goods prices.

The index is produced by IHS Markit and is based on original survey data collected from a representative panel of more than 400 companies in the U.S. service sector. IHS Markit originally began collecting monthly data about the service sector in October 2009.