(Bloomberg) -- U.S. service providers expanded at a record pace in November as steadfast consumer demand drove a further strengthening in business activity and kept orders firm.
The Institute for Supply Management’s services index advanced to 69.1 last month from 66.7 in October, data showed Friday. Readings above 50 signal growth, and the November print exceeded all forecasts in a Bloomberg survey of economists.
Bolstered by rapid wage gains and a stockpile of savings, Americans have the desire and the wherewithal to spend on services. ISM’s gauge of business activity advanced to a fresh record as the new orders index held at a record high in data back to 1997.
All 18 services industries reported growth last month, led by real estate, transportation and warehousing, and retail trade.
“Demand continues to outpace supply that has been impacted by capacity constraints, shortages of labor and materials, and logistical challenges,” Anthony Nieves, chair of the ISM services business survey committee, said in a statement. “This has also caused demand-pull inflation that is affecting overall business conditions.”
While these demand-based gauges continued to show faster growth, other measures hinted supply constraints may be starting to ease. A measure of order backlogs retreated from a record high, and the employment index climbed nearly 5 points to 56.5, its strongest reading since April.
Similar developments emerged earlier in the week with the ISM’s manufacturing survey. Sustained relief from capacity constraints across all industries could help to cool still-rampant inflation pressures.
The ISM’s measure of prices paid by service providers edged down in November to 82.3 from the highest level since September 2005.
Still, the group’s index of supplier delivery times held at the second-highest on record, indicating delays are still well-extended.
(Adds ISM comment)
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