November survey data of business activity in the U.S. signaled a slower rate of expansion in the service sector. Although figures released by Markit Economics showed output growth eased slightly to a five-month low, the upturn in new business accelerated and was solid overall.
Employment growth meanwhile reached a three-month peak, which helped alleviate capacity pressures. In line with this, backlog accumulation
softened to a five-month low. Inflationary pressures intensified with both input prices and output charges rising at quicker paces.
The seasonally adjusted IHS Markit U.S. Services Business Activity Index registered 54.5 in November, down from 55.3 in October. Although
the latest index reading indicated a slightly weaker output expansion, the overall rate of growth was strong by recent standards nonetheless.
Anecdotal evidence suggested that increases in activity were due to greater new order volumes and robust client demand. New orders received by service providers continued to rise in November, with the pace of expansion accelerating from October’s six-month low.
Markit says panelists attributed the improvement in new orders to more favourable demand conditions and the acquisition of new clients
