A report released by the Institute for Supply Management on Wednesday showed the pace of growth in U.S. service sector activity slowed by more than anticipated in the month of November.
The ISM said its non-manufacturing index dipped to 53.9 in November after climbing to 54.7 in October. While a reading above 50 still indicates service sector growth, economists had expected the index to edge down to 54.5.
“The non-manufacturing sector had a slight pullback in November,” said Anthony Nieves, Chair of the ISM Non-Manufacturing Business Survey Committee.
He added, “The respondents hope for a resolution on tariffs and continue to be hampered by constraints in labor resources.”
The bigger than expected decrease by the headline index was partly due to a steep drop by the business activity index, which tumbled to 51.6 in November from 57.0 in October.
Meanwhile, the new orders index rose to 57.1 in November from 55.6 in October and the employment index climbed to 55.5 from 53.7.
The report said the prices index also increased to 58.5 in November from 56.6 in October, indicating a faster rate of price growth.
On Monday, the ISM released a separate report showing U.S. manufacturing activity contracted for the fourth straight month in November.
The ISM said its purchasing managers index edged down to 48.1 in November from 48.3 in October, with a reading below 50 indicating a contraction in manufacturing activity. Economists had expected the index to inch up to 49.2.
“Overall, the latest batch of ISM surveys are clearly a disappointment, but on their own they won’t be enough to trigger a ‘material reassessment’ of the Fed’s outlook for the economy,” said Andrew Hunter, Senior U.S. Economist at Capital Economics.