Economy

U.S. Service Sector Continues to Carry the Economic Weight in November

Service sector employee, nurse at a hospital. (Photo: REUTERS)

The Non-Manufacturing Report On Business, the Institute for Supply Management gauge of service-sector growth, rose to 57.2 last month from 54.8 in October. The latest report beat the median forecast calling for a reading of 55.4.

Readings above 50 indicate expansion, while those below point to contraction.

The 14 non-manufacturing industries reporting growth in November — listed in order — are: Agriculture, Forestry, Fishing & Hunting; Retail Trade; Arts, Entertainment & Recreation; Transportation & Warehousing; Other Services; Management of Companies & Support Services; Construction; Finance & Insurance; Professional, Scientific & Technical Services; Accommodation & Food Services; Information; Health Care & Social Assistance; Wholesale Trade; and Mining.

The two industries reporting contraction in November are: Real Estate, Rental & Leasing; and Public Administration.

While both reports also topped economists’ expectations, the economic data from private sector and government-conducted monthly jobs reports show the service sector continuing to account for the largest share of job creation in the U.S. economy. Unfortunately, most are lower-wage opportunities than their counterparts in manufacturing, which is measured in the Manufacturing ISM Report On Business, as well as other sectors.

The ADP National Employment Report released last Wednesday showed 216,000 people were added to private sector payrolls in November, topping the median forecast expecting 165,000. Payrolls for the month of October were revised lower by 28,000 to 119,000, but service-providing jobs represented 228,000 of total payrolls added in November, while goods-producing sectors lost 11,000.

Natural Resources & Mining lost 4,000 and Manufacturing 10,000. The private sector data preceded the Labor Department report last Friday showing nonfarm payrolls increased by 178,000 jobs. The unemployment rate fell to a more than nine-year low of 4.6%, however, in September and October the previous jobs reports were revised to show 2,000 fewer jobs created than previously reported.

Further, wages pulled back as average hourly earnings fell three cents, or 0.1%. The economy has largely created part-time and lower-wage service-sector employment positions. Manufacturing fell by 4,000 jobs in the November report conducted by the Bureau of Labor Statistics, marking the fourth straight month of decline for the higher-paying industry.

Construction employment increased by 19,000 jobs last month after rising by 14,000 in October. Retail sector payrolls fell 8,300, falling for a second straight month.

ISM^® NON-MANUFACTURING SURVEY RESULTS AT A GLANCE COMPARISON OF ISM^® NON-MANUFACTURING AND ISM^® MANUFACTURING SURVEYS* NOVEMBER 2016
	Non-Manufacturing						Manufacturing
Index	Series Index Nov	Series Index Oct	Percent Point Change	Direction	Rate of Change	Trend** (Months)	Series Index Nov	Series Index Oct	Percent Point Change
NMI^®/PMI^®	57.2	54.8	+2.4	Growing	Faster	82	53.2	51.9	+1.3
Business Activity/Production	61.7	57.7	+4.0	Growing	Faster	88	56.0	54.6	+1.4
New Orders	57.0	57.7	-0.7	Growing	Slower	88	53.0	52.1	+0.9
Employment	58.2	53.1	+5.1	Growing	Faster	6	52.3	52.9	-0.6
Supplier Deliveries	52.0	50.5	+1.5	Slowing	Faster	11	55.7	52.2	+3.5
Inventories	51.5	52.0	-0.5	Growing	Slower	3	49.0	47.5	+1.5
Prices	56.3	56.6	-0.3	Increasing	Slower	8	54.5	54.5	0.0
Backlog of Orders	51.0	52.0	-1.0	Growing	Slower	3	49.0	45.5	+3.5
New Export Orders	57.0	55.5	+1.5	Growing	Faster	3	52.0	52.5	-0.5
Imports	54.0	53.0	+1.0	Growing	Faster	10	50.5	52.0	-1.5
Inventory Sentiment	60.5	62.0	-1.5	Too High	Slower	234	N/A	N/A	N/A
Customers’ Inventories	N/A	N/A	N/A	N/A	N/A	N/A	49.0	49.5	-0.5
Overall Economy				Growing	Faster	88
Non-Manufacturing Sector				Growing	Faster	82

* Non-Manufacturing ISM^® Report On Business^® data is seasonally adjusted for Business Activity, New Orders, Prices and Employment Indexes. Manufacturing ISM^® Report On Business^® data is seasonally adjusted for New Orders, Production, Employment and Supplier Deliveries.

** Number of months moving in current direction.

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PPD Business Staff

PPD Business, the economy-reporting arm of People's Pundit Daily, is "making sense of current events." We are a no-holds barred, news reporting pundit of, by, and for the people.