By Scott Kanowsky
Investing.com -- Growth in the U.S. services industry unexpectedly accelerated in November, overcoming a dip in new orders and pressure from elevated prices, according to new data from the Institute for Supply Management on Monday.
The ISM said its non-manufacturing purchasing managers' index increased to 56.5 during the month, up from 54.4 in October.
Economists had predicted that the reading would fall to 53.3. A mark above 50 generally indicates expansion.
The uptick in activity brings an end to a two-month string of slowing growth in the services sector, which makes up more than two-thirds of the U.S. economy.
ISM's reading of new orders received by these businesses dipped to 56.0 from 56.5 in the previous month but remains well within expansion territory, with companies saying that they are adding fresh customers and ramping up projects. New export orders contracted for a second consecutive month but were offset by a jump in imports.
The survey's measure of services industry supplier deliveries moved down to 53.8 in November. A level above 50 points to a slowing in deliveries, which the ISM says is typical as customer demand rises. The backlog of orders edged slightly lower as well.
Meanwhile, ISM's gauge of prices paid in the services sector retreated marginally to 70 from 70.7 in October but is still at relatively high levels.
The figures come after ISM's survey of manufacturing sector activity in November dropped into contraction territory for the first time since the early days of the COVID-19 pandemic. Prices paid by these firms for raw materials also decreased for the second time in nearly two and a half years, in a continued sign that inflation may be shifting from goods into services.
The Federal Reserve has been raising interest rates aggressively in a bid to temper demand and quell a recent surge in price growth. But the U.S. central bank's chair Jerome Powell has said that "the time for moderating the pace of rate increases may come as soon as the December meeting," referring to an upcoming gathering of policymakers on December 13 - 14.