By Xavier Fontdegloria


The U.S. service sector growth slowed slightly in November as supply and labor strains continued to hamper activity, data from a survey of purchasing managers showed Friday.

The final U.S. Services Purchasing Managers' Index compiled by IHS Markit stood at 58.0 in November, down from 58.7 in October, but higher than the preliminary estimate of 57.0 and the 57.1 forecast from economists polled by The Wall Street Journal.

The indicator suggests that the U.S. services sector continued to expand as it came in above the 50-point threshold that separates expansion from contraction, but the PMI also suggested that the growth pace softened slightly compared with the previous month.

U.S. business activity continued to grow at a solid rate in November, adding to signs that the pace of economic growth is accelerating in the fourth quarter, said Chris Williamson, chief business economist at IHS Markit.

"While growth is not matching the surge seen earlier in the year when the economy reopened, the fourth-quarter expansion should be well above the economy's long-run trend to mark a solid end to the year," he said.

Services providers noted higher output and new orders, mainly stemming from the recovery of client demand following the Covid-19 pandemic. However, others reported that the resurgence of the virus and supply-chain problems acted as deterrents to customers placing orders, the report said.

Cost pressures in the service sector also spiked higher in November, with companies reporting higher prices paid for inputs and staff due to shortages.

IHS Markit said the Composite PMI Index--which combines manufacturing and services sectors--decreased to 57.2 in November from 57.6 in October. Output was led by the service sector as factories were hampered by supply-chain disruptions, IHS Markit said.

Business expectations for the year ahead rose in November, but the survey didn't fully capture the effect from recent news about the Covid-19 Omicron variant.

"[The Omicron variant] casts a renewed shadow of uncertainty over the outlook for business and poses a downside risk to near-term growth prospects," Mr. Williamson said.


Write to Xavier Fontdegloria at


(END) Dow Jones Newswires

December 03, 2021 10:18 ET (15:18 GMT)

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