U.S. services sector activity experienced a minor uptick in November, with business activity up, but new orders (a gauge of demand) growing at a slower pace from October while employment contracted for the sixth month in a row. The service sector's struggles continue.

The ISM Services PMI saw a small improvement to 52.6 in November, up from the 52.4 recorded in October, and better than expectations for 52.1 in the Econoday survey of forecasters.

November's Services PMI is a continuation of a downward trend (as noted in the October report) of more than 10 percentage points in the 12-month average since February 2022, when it was 62.6 percent, the report said. 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 for the services sector.

The employment reading, although in contraction, was still its highest since May.

On the downside, tariffs and the government shutdown continue to be noted by survey respondents as impacting both demand and costs, it said.

The prices paid index, at 65.4, was a noticeable drop from 70.0 in October, but the index has been above 60.0 for 12 consecutive months - uderlining the sticky nature of services price inflation.

A flat reading expected at 52.4 for November versus 52.1 in October showing ongoing slow growth.

Producing a monthly composite on general activity tracked in volumes, the Institute for Supply Management surveys several hundred service-providing firms from 16 industries (construction and mining are included). The services composite index has four equally weighted components: business activity (closely related to a production index), new orders, employment, and supplier deliveries (also known as vendor performance). The first three components are seasonally adjusted but the supplier deliveries index does not have statistically significant seasonality and is not adjusted. For the composite index, a reading above 50 percent indicates that the services economy is generally expanding; below 50 percent indicates that it is generally declining. The supplier deliveries component index requires extra explanation: a reading above 50 percent indicates slower deliveries and below 50 percent indicates faster deliveries.

Investors need to keep their fingers on the pulse of the economy because it dictates how various types of investments will perform. By tracking economic data like the ISM services index, investors will know what the economic backdrop is for the various markets. The services index is a composite of four equally weighted components: business activity, new orders, employment, and supplier deliveries. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly -- and causing potential inflationary pressures. While the ISM manufacturing index has a long history that dates to the 1940s, this report goes back to 1997. Note that in 2020 the ISM changed the name of the report to services from non-manufacturing though it continues to track two key goods producing industries: construction and mining.