ISM® PMI® Reports Roundup: November Services

The ISM^® Services PMI^® Report on Wednesday revealed a sector that appears to be hanging in there heading into the holidays, but the slight increase in the composite index for November came with caveats and cautionary notes.

The Services PMI^® of 52.6 percent, bolstered by encouraging readings on business activity and orders, is above the 12-month average of 51.7 percent. However, the 12-month average is more than 10 percentage points below its level in early 2022, and although November brought some relief on prices, they remain historically high.

Also, the PMI^® was boosted by the Supplier Deliveries Index, which increased to 54.1 percent, indicating slower deliveries that were not a product of demand as much as delays and disruptions related to the federal government shutdown and tariffs. Still, as was alluded to a month ago, stability is not a bad place for the sector to be, especially given such recent events and the shutdown and continuing trade turbulence.

November ISM Services up to 52.6 vs. 52 est. & 52.4 prior … new orders down to 52.9 vs. 56.2 prior; prices paid down to 65.4 vs. 70 prior; employment up to 48.9 vs. 48.2 prior pic.twitter.com/xZALUkKBeb

— Liz Ann Sonders (@LizAnnSonders) December 3, 2025

“(There are) positive signs of an emerging recovery for the services sector,” Steve Miller, CPSM, CSCP, Chair of the Institute for Supply Management^® (ISM^®) Services Business Survey Committee, told a conference call of reporters on Wednesday.

The New Orders Index registered 52.9 percent, a decrease of 3.3 percentage points compared to October, but Miller noted that the index remained above its 12-month average. Also, the Backlog of Orders Index (49.1 percent) reached its highest reading since February, although that gauge has been volatile in the last four months.

Healthier demand was also evident, Miller said, in the Prices Index, which in October reached an unenviable threshold of 70 percent for the first time in three years. That index fell to 65.4 percent in November — still elevated but with signs that tariffs were not as onerous of an impediment as in previous months.

Wrote a Services Business Survey panelist in Accommodation & Food Services, “Suppliers are very inconsistent on how they are planning and executing pricing related to tariffs. Overall uncertainty on (sourcing) as high as during the coronavirus pandemic era.”

However, such sentiment was in the minority, as Miller said that in November, 20 percent of panelists’ general comments were on tariffs, down from 50 percent during the summer months.

“The noise is reducing and the index has gone down a bit, but we’re still seeing increases,” Miller said. “It looks like inflationary pressures are easing, except for in lumber, engineered wood products and gasoline. There are healthy reductions in prices paid (for other commodities), so the general trend is for continuing inflation, but at a slower rate.”

ISM services was held up by a rise in supplier deliveries that will likely prove temporary. The report noted it reflected the disruptions to air travel due to the shutdown. Without that, we would have seen a small drop in the ISM services gauge as there was a big drop in orders.

— Omair Sharif (@fcastofthemonth) December 3, 2025

The Employment Index reading of 48.9 percent in November was the highest since May (50.7 percent). Amid delayed U.S. Bureau of Labor Statistics data, ISM’s numbers and the private payrolls report from ADP — which on Wednesday indicated a decrease of 32,000 jobs in the U.S. in November — are perhaps the most definitive employment gauges for now.

The Prices Index reading and ADP jobs report were well-received on Wall Street, as the Dow Jones Industrial Average rose 400 points in midday trading on Wednesday, with investors hopeful of another interest-rate cut when the U.S. Federal Reserve meets next week.

In other subindex news:

• The Business Activity Index was steady, up 0.2 percentage point to 54.5 percent, in expansion territory for the 33rd time in 35 months.
• The Inventories Index returned to expansion with a reading of 53.4 percent, a sign of services businesses’ confidence in demand.
• The New Export Orders Index registered 48.7 percent, an increase of 0.9 percentage point compared to October.

The ISM^® PMI^® Reports roundup:

The Associated Press: Wall Street Drifts Near its All-Time High as Most Stocks Rise. “A report later in the morning on activity for U.S. services business was more encouraging. It said growth was stronger last month than expected for businesses in the retail, finance, insurance and other industries. Perhaps just as important was that Institute for Supply Management’s survey also said prices were increasing at their slowest rate since April.”

Bloomberg: U.S. Services Activity Expands at Fastest Pace in Nine Months. “The (Prices Index) showed the slowest growth in seven months. While still historically high, the figure indicates some easing of inflationary pressures. The overall services gauge was underpinned by a lengthening of supplier delivery times as well as a further improvement in business activity.”

MarketWatch: U.S. Economy is Still Growing, ISM Says, but ‘Tariff Uncertainty’ Depresses Sales and Hiring. “Executives said tariffs were still weighing on the economy, though some said they were seeing signs of improvement. For now most companies are being cautious. … The economy has shown more signs of weakness in the fourth quarter despite a seemingly solid start to the holiday shopping season.”

ISM Services commentary in November leaned cautious ... only two positive comments (coming from Finance and Utilities sectors) pic.twitter.com/I8f2Aiq1bZ

— Kevin Gordon (@KevRGordon) December 3, 2025

Reuters: U.S. Services Little Changed in November, But Orders Slow. “The (New Orders Index) dropped to 52.9 percent in November from 56.2 percent in the prior month. Backlog orders remained weak, though the pace of decline slowed considerably. Prices paid by services businesses for inputs cooled to still-high levels, indicating inflation could remain above the Federal Reserve's 2-percent target for some time.”

The Wall Street Journal: U.S. Services-Sector Activity Rises Again. “The (New Orders Index) slipped compared with October, when the index accelerated, but remained in expansion. The Business Activity Index rose on month, while employment contracted for the sixth month in a row, though not as sharply, the survey showed. … Still, higher tariffs and the government shutdown remain a key concern for survey respondents, seen hitting both demand and costs.”

In case you missed Monday’s ISM^® PMI^® Reports Roundup on the release of the November ISM^® Manufacturing PMI^® Report, you can read it here. Also, the ISM^® Supply Chain Planning Forecast (formerly the Semiannual Economic Forecast) for the manufacturing and services sectors will be released on December 16. 

For the most up-to-date content on the reports under the ISM^® PMI^® Reports umbrella, use #ISMPMI on X, formerly known as Twitter.

(Photo credit: Getty Images/Westy72)