PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

ISM Reports Strengthening in Services Sector

By at 3 December, 2020, 7:10 pm

by Raymond J. Keating-

We received a couple of readings on manufacturing in November earlier this week, and now it’s time to see what key purchasing manager indices are telling us about how services looked last month. The good news is that both point to the recovery in services continuing in November.

The Institute for Supply Management reported that services grew in November, which was the sixth consecutive month of expansion. In fact, the ISM services measure has expanded in 128 of the 130 months – with big declines in April and May of this year. All 14 service industries covered in the ISM measure expanded in November.

Meanwhile, the IHS Markit Services PMI registered the largest increase in November since March 2015.

Indeed, the tone of the IHS Markit report was unabashedly positive:

“The upturns in output and new business accelerated substantially to the fastest since March 2015 and April 2018, respectively. As a result, firms took on extra staff at the steepest rate on record, as pressure on capacity accumulated. Business expectations also strengthened to the most buoyant since January 2014.”

The IHS Markit US Services PMI Business Activity Index came in at 58.4 in November, compared to 56.9 in October.

It also was reported that private sector employment increased at the fastest rate since October 2009, according to this index.

Let’s hope that the confidence exhibited in the IHS Markit report takes firm hold and spreads across the economy. Progress on COVID-19 vaccines clearly works in favor of this, especially over the longer run, while short-term challenges regarding the pandemic remain.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

 

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