• The S&P Global Composite PMI fell to 54.2 in November from 54.8, signaling a deceleration in the pace of overall economic growth.
  • The Services PMI, a key driver of the economy, dropped to 54.1 from 55.0, though it remains firmly in expansion territory.
  • The data reveals a persistent split, with the services sector continuing to grow while manufacturing remains in contraction for the ninth consecutive month.

A Modest Slowdown in Momentum

US business activity expanded at a slower pace in November, according to the latest S&P Global flash purchasing managers' index data. The Composite PMI, which tracks both manufacturing and services, dipped to 54.2 from October's 54.8. While still well above the 50.0 threshold that separates growth from contraction, the reading points to a cooling in the economic engine after a strong third quarter.

The services sector, which accounts for the lion's share of US GDP, was the primary contributor to the slowdown. The Services PMI fell to 54.1 from 55.0 the prior month. Sources close to the data compilation noted that while new business inflows remained healthy, the rate of growth moderated from earlier in the year. Employment growth also softened slightly, with some firms reporting challenges in filling vacancies left by voluntary departures.

"The expansion continues, but the foot has come off the gas a little," said an economist familiar with the report, who spoke on condition of anonymity. "The key takeaway is resilience, not re-acceleration."

Cost Pressures and Manufacturing Woes

Beneath the headline numbers, input cost inflation re-emerged as a concern for service providers. The rate of input price increase was the fastest since January 2023, according to the report, leading firms to pass on higher costs to customers through reaccelerated selling charges. This uptick in price pressures will likely be noted by Federal Reserve officials as they assess the inflation trajectory.

The manufacturing sector, meanwhile, continues to drag. Separate data from the Institute for Supply Management showed its Manufacturing PMI registered 48.2 percent in November, marking the ninth straight month of contraction. New orders and employment components within that index both declined, underscoring ongoing demand weakness and economic uncertainty for goods producers. This creates a stark bifurcation in the US economic landscape, with services holding the line while manufacturing struggles.

Despite the mixed signals, business optimism for the year ahead actually improved in November, reaching an 11-month high among service providers. This suggests that while the current pace may be easing, executives are not bracing for a downturn. The indicated annualized GDP growth rate based on the composite PMI is approximately 3.0%, which aligns closely with pre-pandemic trend growth, hinting at a potential normalization after a period of exceptional volatility.

Correction: An earlier version of this article misstated the prior month's Services PMI. It was 55.0, not 54.9.