U.S. service sector slows in November

By Agence France-Presse
Monday, December 5, 2011 13:08 EDT
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Growth in the US service sector slowed in November from the previous month, underscoring the easing trend since the beginning of the year, according to a closely watched index released Monday.

The Institute of Supply Management said that service sector purchasing and supply executives reported a rise in new orders but a contraction in employment, while prices paid for goods jumped in November.

Overall, the ISM index of service sector activity slowed to 52.0, still in positive growth territory but below the 52.9 level of October and 59.4 in January.

It was the lowest level since January 2010, and left a mixed picture for the economy’s fourth-quarter performance.

“Respondents’ comments for the most part project continued slow, incremental growth. There still remains a strong concern about lagging employment,” the ISM said in a statement.

Among the industries reporting a contraction in activity in November were entertainment and recreation; educational services; finance and insurance; and construction.

Retail trade, mining, utilities, real estate, accommodation and food services, and health care were among sectors reporting increasing activity.

“Business activity continues to swing back and forth. Customer traffic remains lower than expected, but discretionary spending is fluctuating, making it difficult to find the pulse of the consumer,” said one executive polled by ISM.

Meanwhile the Commerce Department said US factory orders fell in October for the second straight month, mainly pulled down by a sharp decline in civilian aircraft and parts.

Total new orders for manufactured goods dropped by 0.4 percent, or $1.6 billion, to $450.0 billion.

Excluding transportation, factory orders rose 0.2 percent month on month.

RDQ Economics said the ISM report on the service sector “is stronger on optimism than on more quantifiable aspects of business.”

It “points to continuing expansion in the fourth quarter but, unlike many other reports, does not confirm a pickup in the pace of growth.”

On the October factory order data, it said that based on the core (non-transport) data, “order growth has continued over the last three months but at a slower rate than seen over the last year.

“High-tech orders, in contrast, have risen at a significantly faster pace recently.”

Agence France-Presse
Agence France-Presse
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