When all else fails — as it appears to be currently — you can always depend on Americans milling around in the services economy, where they’ll invariably find an excuse to spend money. Even if they don’t have any.
The marquee measure of US services sector activity inched up to a nine-month high in November, according to Wednesday’s update from ISM.
The headline, 52.6, wasn’t exactly gangbusters, but it’ll work at a time when not a lot else seems to be. The data came on the heels of the worst headline ADP print since 2023 and accompanying news that small businesses in America shed 120,000 jobs last month.
As the simple figure reminds you, the services sector’s doing all the heavy lifting, and then some. This week’s update on ISM manufacturing showed another contraction, the 34th in 37.
“The continued expansion in both the Business Activity and New Orders indexes in November, and the highest Backlog of Orders index reading since February 2025 are positive signs of an emerging recovery,” ISM’s Steve Miller said Wednesday. “On the downside, tariffs and the government shutdown continue to be noted by survey respondents as impacting both demand and costs.”
Although, as Miller noted, the new orders gauge is indeed still in expansion, it fell more than three points from October, to 52.9. Markets, though, will understandably key on another improvement for the employment index and a meaningful decline on the prices gauge.
As the figure shows, 48.9, while still indicative of contraction, counts as the best read on the employment index since May. The prices index, at 65.4, was the lowest of the post-“Liberation Day” era, even as it’s still far too high for comfort.
Frankly, that’s all that really matters here. Traders, carbon-based and otherwise, are perhaps even more sensitive to the employment and price gauge prints than the headline given the read-across for stagflation.
Suffice to say a nine-month high on the headline and an attenuated stagflation signal from the price and employment indexes together make for a good report.
