After the ISM report earlier this week that showed the manufacturing sector of the US economy contracting at its fastest rate since the end of the last recession, ISM’s report on the services sector for November showed continued expansion in this sector of the economy. Make no mistake, though, while the ISM Services report was still firmly above 50, it was still a lousy report. While economists were expecting a modest decline to 58.0 from last month’s reading of 59.1, the actual drop was much larger. At a level of 55.9, November’s decline was the largest one-month decline in the headline index since November 2008.
The second chart below shows the combined ISM report for November based on each sector’s share of the total economy. This month’s combined reading dropped three points, falling from 58 down to 55, which is the lowest reading since March 2014. The last time the combined ISM index declined 3 or more points was also in November 2008.
The table below breaks down this month’s ISM Non-Manufacturing report by each of the index’s subcomponents. On a month/month basis, just four of ten components increased this month. The biggest decliners this month came in Export Orders, Business Activity, New Orders, and Employment which all saw declines of at least four points. On a year/year basis, the breadth was even weaker as inventory sentiment was the only category that is higher now than it was a year ago.