The seasonally adjusted Markit Flash U.S. Services PMI™ Business Activity Index – which is based on approximately 85% of usual monthly replies – registered 56.3 in November, down from 57.1 in the previous month and the lowest reading since April. Moreover, the index has now pointed to softer growth of business activity in each of the past five months, to signal a sustained loss of momentum since the post-crisis peak seen in June.
Weaker service sector output growth largely reflected a moderation in new business gains during November. The latest rise in incoming new work was the slowest for seven months and slightly less marked than the average seen since the survey began in October 2009. Some survey respondents commented on weaker client confidence and associated delays to the launch of new projects.
Meanwhile, unfinished work increased across the service economy for the fourth month running in November. The current period of sustained backlog accumulation is the longest since 2012/13, suggesting continued pressure on operating capacity. This in turn supported employment growth during the latest survey period, with the pace of job creation accelerating to a five-month high in November.
Increased payroll numbers also reflected an upturn in confidence towards the business outlook. More than half of the survey panel anticipate a rise in business activity over the year ahead, and the overall degree of confidence picked up since October to its strongest for five months.
November data signalled that service sector input cost inflation moderated for the third month running and was below the survey average. Prices charged by service providers increased at a slower pace in November, with the rate of inflation easing to its lowest since July.
At 56.1 in November, down from 57.2 in October, the seasonally adjusted Markit Flash U.S. Composite PMI Output Index signalled a robust expansion of overall private sector activity. However, the latest reading signalled the slowest rise in overall output since April, reflecting weaker growth contributions from both the manufacturing and service sector in November.