Dollar softens as U.S. services PMI revised down to 54.1; yields slip ahead of ISM
The U.S. services sector expanded in November but at a slower pace than first estimated, with the S&P Global Services PMI revised to 54.1 from the 55.0 flash reading. The softer tone nudged Treasury yields lower and pressured the dollar, with sterling leading gains as traders positioned for the ISM survey next.
Services growth cools from flash print
The final S&P Global U.S. Services PMI for November came in at 54.1, down from the preliminary 55.0 and slightly below October’s 54.8. The final Composite PMI—combining manufacturing and services—registered 54.2, easing from a preliminary 54.8 and versus 54.6 in October. Readings above 50 indicate expansion.
The data suggest the services engine remains a key pillar of growth, though momentum moderated into late November. The mix—continued expansion with softer breadth—reinforces a picture of steady but unspectacular activity as markets gauge the inflation and policy path into year-end.
Sector performance: finance leads, consumer services lags
- All seven tracked U.S. sectors expanded in November, extending October’s growth.
- Financials was the top performer, with activity rising at a sharply accelerated pace, the fastest since December 2024.
- Consumer Goods ranked second; production increased at the fastest clip since April 2022, supported by a survey-record build of finished goods inventories, though new orders slowed to the weakest since April.
- Industrials strengthened, with business activity growth at a three-month high.
- Basic Materials posted its slowest output rise since July.
- Technology remained in expansion but saw the largest loss of momentum; output growth was the weakest in six months, albeit still solid.
- Consumer Services was the weakest-performing sector overall, with only marginal growth, the slowest in four months.
Market reaction: USD offered, yields ease
The dollar traded lower against all major peers following the softer final print. GBP/USD outperformed, up roughly 0.76%, testing the 200-day moving average near 1.3319 after touching 1.3316. U.S. rates drifted lower, with the 10-year Treasury down about 3 bps and the 2-year off around 3.5 bps, reflecting a modest paring of growth and inflation expectations ahead of the ISM release. The move points to slightly easier financial conditions intraday, a backdrop typically supportive of risk appetite, BPayNews observed.
What traders are watching next
Attention turns to the ISM Services Index, with consensus looking for 52.1 (prior 52.4). Last month’s ISM components included Business Activity 54.3, Employment 48.2, New Orders 56.2 and a hot Prices Paid 70.0. Any cooling in prices paid could bolster the case for disinflation, while a rebound in employment would temper that dovish offset. FX volatility may rise if ISM diverges meaningfully from S&P Global’s softer tilt.
Key Points
- U.S. S&P Global Services PMI (Nov) final: 54.1 vs flash 55.0; Oct 54.8.
- Composite PMI (Nov) final: 54.2 vs flash 54.8; Oct 54.6.
- All seven sectors expanded; Financials led, Consumer Services lagged.
- Dollar weakened broadly; GBP/USD tested the 200-DMA ~1.3319.
- U.S. yields lower: 10-year -3 bps, 2-year -3.5 bps.
- Focus shifts to ISM Services (consensus 52.1) and inflation-sensitive components.
FAQ
What did the S&P Global U.S. Services PMI show for November?
The final Services PMI printed 54.1, revised down from the flash 55.0 but still signaling expansion. October was 54.8.
How did markets react to the PMI revision?
The U.S. dollar softened across majors, with sterling leading gains. U.S. Treasury yields slipped by roughly 3 bps on the 10-year and 2-year, reflecting a mild growth/inflation downshift ahead of ISM.
Which sectors looked strongest and weakest?
Financials led with accelerated growth, followed by Consumer Goods and Industrials. Consumer Services was the weakest, while Technology lost momentum and Basic Materials slowed to its weakest output rise since July.
How does S&P Global’s PMI differ from the ISM Services Index?
Both measure services activity but use different survey panels and methodologies, often resulting in divergent readings. Markets watch both for a fuller picture of services momentum.
Why does a PMI above 50 matter?
A reading above 50 indicates expansion in activity compared with the prior month. Sustained readings above 50 typically align with economic growth, while sub-50 suggests contraction.
