Have you ever watched the economy go through one of those periods where it just refuses to slow down, no matter what gets thrown at it? That’s pretty much the story with the US services sector right now. As we wrapped up November 2025, the latest surveys came in with a blend of signals that left analysts scratching their heads a bit – some pointing to steady strength, others hinting at potential cracks. It’s the kind of data that keeps investors up at night, wondering if this resilience is the real deal or just a temporary bounce.
In my view, these numbers highlight something I’ve noticed over the years: the services side of the economy has this incredible ability to adapt. While manufacturing grabs headlines with its ups and downs, services – everything from finance to hospitality – often chug along, supporting growth even when other areas falter. But let’s dig into what the November data actually told us.
November’s Mixed Signals from Key Services Surveys
The two main gauges for the services sector delivered contrasting headlines this time around. One survey showed a slight dip, while the other edged higher, beating what most experts had penciled in. It’s classic “glass half full or half empty” territory.
On one hand, the S&P Global services reading came in at 54.1 for November, down a touch from the prior month and below the initial flash estimate. That marked the softest expansion in a few months. Yet anything above 50 still signals growth, and this was solidly in positive terrain. Meanwhile, the ISM services index climbed to 52.6, up from October and stronger than anticipated. This was its best showing in quite a while.
Perhaps the most interesting part? The details under the hood didn’t always align. For instance, one report highlighted easing price pressures, while the other noted them picking up – often tied to ongoing tariff discussions. New orders looked healthier in one, weaker in the other. Employment trends also diverged, with signs of solid hiring in some areas but lingering softness elsewhere.
The services sector continues to demonstrate impressive staying power, driven by robust demand and supportive financial conditions like lower rates and stock market gains.
– Chief Business Economist commentary
Overall, the composite picture suggested the private sector kept expanding at a decent clip, pointing toward annualized GDP growth around 2% or so for the quarter. Not booming, but far from stalling.
Breaking Down the Headline Numbers
Let’s get a bit more granular. The S&P Global composite PMI held steady near 54, indicating trend-like growth across both manufacturing and services. New business inflows picked up pace, which encouraged companies to ramp up staffing – a solid increase, actually, the strongest in months.
Input costs rose to a multi-month high, though, with firms passing some of that on through higher charges. Tariff-related worries loomed large here, as businesses cited them as a key driver pushing expenses up.
- Stronger new orders supporting output
- Employment growth remaining positive
- Backlogs building, showing capacity strains
- Business confidence improving slightly
Over at the ISM side, the uptick was welcome after some softer reads earlier in the year. Business activity stayed firm, and while employment was still in contraction territory, it improved from prior lows. Prices paid eased notably, offering some relief on the inflation front.
| Indicator | S&P Global (Nov 2025) | ISM (Nov 2025) |
| Headline PMI | 54.1 | 52.6 |
| New Orders | Improved | Slight decline |
| Employment | Solid increase | Still contracting but better |
| Prices Paid | Rising | Big drop |
This table really captures the divergence. It’s why economists often say to look beyond headlines – the nuances tell a richer story.
What’s Driving This Resilience?
So why does the services economy keep holding up? A few factors stand out. Lower interest rates have been a boon, making borrowing cheaper and boosting sectors like finance. Equity markets have performed well too, putting more money in people’s pockets through wealth effects.
Consumer spending on services hasn’t faded much, even with affordability challenges in spots. People are still dining out, traveling, and using professional services. Financial services, in particular, saw a surge.
That said, not everything’s rosy. Affordability issues are biting for some households, and businesses report pressure on demand as a result. The end of certain disruptions helped sentiment toward late November, but optimism tempered a bit.
Demand for services rose at the fastest rate this year, underscoring sustained economic momentum despite headwinds.
I’ve found that financial conditions often play a huge role in these cycles. When rates ease and stocks rise, it filters through to services spending pretty quickly.
The Tariff Elephant in the Room
No discussion of recent data would be complete without mentioning tariffs. They’re front and center in many survey comments. Firms are passing higher costs along, which accelerates input inflation in some readings.
This raises a big question: Could rising prices deter further rate cuts? That might crimp the financial services boom that’s been a major growth driver lately. On the flip side, if tariffs ease or get managed better, it could provide upside relief.
It’s a delicate balance. Hawks might point to inflation risks, while doves focus on softening headlines. In reality, the economy seems to be navigating both.
- Tariffs push up input costs
- Firms raise output charges in response
- Potential dampening of demand if prices climb too far
- But current growth absorbs it so far
Personally, I think tariffs will remain a wildcard into 2026. Their full impact often lags, so we’re likely still feeling the ripples.
Employment Trends: A Closer Look
Jobs in services are crucial – this sector employs the vast majority of Americans. The mixed signals here are noteworthy. One survey showed robust hiring to meet demand, while the other indicated ongoing contraction, albeit milder.
Capacity pressures are evident, with backlogs rising. That usually precedes more hiring. Yet labor availability remains a gripe for many firms.
Broader labor market data has cooled, but services have held up better than goods-producing industries. If demand stays firm, expect hiring to pick up.
Implications for GDP and Broader Growth
Putting it together, these surveys suggest the economy expanded at a healthy pace in Q4 2025. Estimates around 2-2.5% annualized aren’t shabby, especially post-shutdown disruptions.
Services carrying the load makes sense – it’s the biggest chunk of GDP. Manufacturing’s softer patch contrasts, but overall resilience shines through.
Looking ahead, optimism ticked up, partly from resolved issues. But late-month fading suggests caution.
Investor Takeaways: Doves vs. Hawks
For markets, it’s choose-your-narrative. Doves can highlight softening headlines and easing prices in spots, arguing for supportive policy. Hawks counter with persistent expansion and inflation risks from trade policies.
In my experience, resilient services data often supports risk assets like stocks. But watch inflation metrics closely – they could sway central bank decisions.
At the end of the day, November’s services surveys reinforced that the US economy has real staying power. Mixed details aside, growth persists amid challenges. Whether it carries into the new year depends on how tariffs, rates, and demand evolve. One thing’s clear: this sector isn’t giving up easily.
That’s the beauty of economic data – it rarely gives straight answers, but piecing it together reveals the bigger picture. Sustained resilience? Absolutely, for now.
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