• The ISM Services PMI rose to 52.6 in November, marking the ninth consecutive month of expansion in 2025 and exceeding both the prior month's reading and analyst expectations.
  • The data highlights a stark divergence from the manufacturing sector, where the PMI fell to a four-month low of 48.2, signaling contraction.
  • While the reading suggests stabilization after a weak September, underlying concerns about business confidence and employment persist, pointing to an uneven economic recovery.

A key gauge of the US services sector showed unexpected strength in November, providing a counterpoint to growing concerns about a broader economic slowdown. The Institute for Supply Management's Services Purchasing Managers' Index (PMI) registered 52.6 last month, according to data released Monday. This reading topped both the 52.4 recorded in October and the median economist forecast of 52.1, indicating a slightly faster pace of expansion in the vast non-manufacturing segment of the economy.

The November figure marks the ninth straight month the index has remained above the 50-point threshold that separates expansion from contraction in 2025. This continued growth underscores the resilience of consumer-facing industries, from hospitality to healthcare, even as higher interest rates weigh on other parts of the economy. The rebound from September's stalled reading of 50.0 appears to be gaining a modest foothold.

However, the positive services data arrives against a contrasting backdrop. Just days before, a separate ISM report revealed the Manufacturing PMI fell to 48.2 in November, its lowest level in four months. This divergence paints a picture of a two-speed economy, where services continue to grow while factory activity contracts. "The story remains one of sectoral imbalance," said one market analyst, who requested anonymity ahead of client briefings. "The consumer is still spending on experiences, but capital investment and goods demand are clearly softening."

Looking at the longer-term trend, the services sector's strength is relative. The 12-month average for the index has declined more than 10 percentage points since its post-pandemic peak of 62.6 percent in February 2022, a sign that the breakneck pace of growth has decisively cooled. Furthermore, earlier components of the ISM report have shown the Employment Index languishing in contraction territory, reflecting what one economist described as "hesitance among businesses regarding expansion and hiring confidence."

Market reaction was muted but positive, with futures for the S&P 500 edging higher following the release. The data complicates the Federal Reserve's calculus as it looks for signs that its restrictive policy is sufficiently slowing the economy to bring inflation back to its 2% target. A resilient services sector could support arguments for keeping rates higher for longer.

Correction: An earlier version of this article misstated the number of consecutive months of expansion. It is the ninth month in 2025, not the eleventh.