US service industry improves more than expected in November
Service sector activity in the US improved more than expected in November, according to figures released on Monday.
The Institute for Supply Management’s index of non-manufacturing activity rose to 57.2 from 54.8 the month before, hitting its highest level since October last year and beating expectations for a reading of 55.3.
Meanwhile, the non-manufacturing business activity index increased to 61.7 from October’s 57.7, reflecting growth for the 88th consecutive month, at a faster rate in November.
The new orders index printed at 57.0 compared to 57.7 in October, while the employment index was up from 53.1 to 58.2.
Capital Economics said: "Following the improvement in the October retail sales data, the rise in the ISM non-manufacturing index to a 13-month high in November suggests that service sector activity has continued to strengthen.
"Overall, a weighted average of the two ISM activity indices is now consistent with GDP growth of more than 3% annualised in the fourth quarter. With net trade likely to be a modest drag on growth over the rest of the year, we think 2.5% annualised is probably more realistic. But with the risks to that forecast now appearing to lie to the upside, this provides further evidence to suggest that a rate hike at the FOMC meeting concluding next Wednesday is now a near-certainty."
Dennis de Jong, managing director at UFX.com, said: “An above-expectations uptick in ISM non-manufacturing PMI for November suggests that the US services sector – which accounts for two-thirds of the country’s economic activity – has remained a robust proposition in the weeks since Donald Trump’s surprise election victory.
“However, with an increasingly gloomy global financial outlook to contend with, not least following yesterday’s Italian referendum result, the Champagne should remain on ice in Trump Tower for the time being.
“The most immediate implication of today’s data is its impact on next week’s FOMC meeting, where Fed Chair Janet Yellen is expected to finally pull the trigger on the first interest rate hike for a year.”