Growth at US service providers unexpectedly accelerated in November as a measure of business activity jumped by the most since March 2021, suggesting the largest part of the economy remains resilient.

The Institute for Supply Management’s gauge of services rose to 56.5 last month from 54.4 in October, according to data released Monday. Readings above 50 signal growth, and the median projection in a Bloomberg survey of economists was 53.5.

The surge in business activity pushed the index, which parallels the ISM’s factory output gauge, to the highest level since the end of 2021.

The firmer services reading contrasts with ISM’s manufacturing data, which showed last week that factory activity contracted for the first time since May 2020. US producers are feeling the pinch from a global economic slowdown as well as an inventory overhang at some domestic retailers.

Thirteen services industries reported growth in November, led by real estate, rental and leasing, mining, and agriculture, forestry, fishing and hunting.

ISM’s measure of services employment also improved while a gauge of new orders eased to the lowest since May. The slowdown in bookings may indicate that activity could ease in coming months as some Americans tighten their belts against a backdrop of still-high inflation and rising borrowing costs.

The prices-paid index edged down but remains elevated at 70, well above pre-pandemic levels and suggesting inflation may be slow to dissipate.

The ISM index of services inventories edged up in November, showing stockpiles are declining but at a slower pace. At the same time, the gauge of inventory sentiment fell to the lowest level since March and indicated more service providers see stockpiles as too low relative to business activity.

Select Industry Comments
“New business requests are solid, with costs rising steadily for materials, meals and lodging.” –Construction

“The demand for energy services remains very strong for the foreseeable future.” –Mining

“Job openings are seemingly continuing to decrease, but with demand for top talent still high and availability still rather scarce, the opportunity for growth is still there.” –Professional, Scientific & Technical Services

“Overall business is stable. Employment is low and inflation is lower than last month. Supply chain issues are stabilizing.” –Retail Trade

“Still struggling with recruitment, though we are starting to see more (higher quality) applicants, and (we are) hopeful the situation will quantitatively change in the first quarter of 2023.” –Transportation & Warehousing

“Business volume appears to be leveling out based on a month-over-month comparison, although we are up significantly when compared to the same month last year.” –Wholesale Trade

The weakness in global demand that has hit manufacturers is also putting pressure on US service providers. The ISM gauge of services exports fell to 38.4, the lowest since the immediate onset of the pandemic.

In a sign supply-chain pressures are easing, the index of delivery times at service providers retreated to the lowest since February 2020 while order backlogs fell for a fifth month to the lowest since March 2021.

--With assistance from Kristy Scheuble.

This article was provided by Bloomberg News.