US Services Expand Again in November while Industrial Production Shows Modest Growth
The latest figures from the Institute for Supply Management reveal that the US service sector continued to expand in November, reinforcing the steady momentum the industry has maintained throughout the year. The Services Purchasing Managers Index inched higher to 52.6% from the previous month’s 52.4%, marking the ninth straight month that the gauge has stayed above the crucial 50% level which separates expansion from contraction. Although the rise was modest, it highlighted the continued resilience of the service economy even as certain components showed signs of softening.
New orders, which often serve as an early signal of future business activity, slipped to 52.9% after a noticeable monthly decline. The easing in new demand suggests that businesses may be approaching the final stretch of the year with a more cautious outlook. Despite this pullback, the Business Activity Index showed a slight improvement and reached 54.5% which reflects that ongoing operations remain healthy even if forward looking momentum softened.
The employment component painted a more mixed picture. The Employment Index improved slightly on a monthly basis and came in at 48.9% . Although the uptick offered some encouragement, it still remained below the 50% value which indicates contraction. This suggests that service firms may still be hesitant to scale up hiring aggressively, possibly due to the broader uncertainty surrounding wage pressures, operating costs and demand conditions heading into the new year.
Industrial production data added nuance to the overall economic landscape. The Federal Reserve reported that industrial output edged higher by 0.1% in September compared to the previous month. Manufacturing output was flat, mining activity showed no change and utilities posted a modest gain of 1.1% . When measured against the same month a year earlier, total industrial production expanded by 1.6% which signaled that the sector continued to progress at a measured but stable pace. Manufacturing improved by 1.5% over the year, mining rose by 2.8% and utilities increased by 1.4%.
Capacity utilization, which reflects how much of the country’s industrial capacity is being used, stood at 75.9%. Although this level was still 3.6 percentage points below its long run average, it was 1.4 percentage points higher than the figure recorded a year earlier. This indicates that the industrial sector remains below full efficiency but is improving slowly, suggesting room for further expansion should demand conditions strengthen.
With no major high impact events on the economic calendar and no fresh catalysts expected to sway policy makers at the Federal Reserve, markets may turn their attention to technical dynamics today.
The US Dollar Index is currently trading below the EMA 200, which continues to slope downward. This indicates that the broader trend remains bearish despite the recovery seen since late summer. Every attempt to break above the EMA 200 has been rejected so far, which confirms the moving average as a strong dynamic resistance.
Price has also slipped below the short-term ascending trendline that guided the rally from September. The recent dip has brought the index into the upper region of the Ichimoku Cloud. Trading inside the cloud usually signals uncertainty and the potential start of a trend shift. However, the fact that the cloud is still relatively flat and the forward cloud does not show strong bullish expansion limits the upside conviction. A clean move below the cloud would reinforce a return to a bearish phase, while a bounce from the lower cloud band would give the bulls another chance.
The Fibonacci retracement drawn from the June low to the October high shows price hovering between the 0.618 and 0.786 levels. The index is currently testing the 0.618 zone, which aligns with light structure support. If this level fails, the next support sits near the 0.5 retracement and the lower edge of the cloud.
The TDI indicator is clearly pointing lower. The green signal line has crossed below the red and yellow bases while both are heading toward the lower volatility band. This is a bearish momentum signal and suggests that sellers are gaining strength. The angle of the TDI drop also reflects increasing downside pressure, which usually precedes further weakness in the underlying asset.
Taken together, the indicators present a bearish technical bias. The rejection near the EMA 200, the break of the rising trendline, and the weakening momentum on TDI support a move lower unless the cloud provides a strong bounce. If price closes below the lower edge of the Ichimoku Cloud, the likely scenario is a continuation toward the 0.5 retracement and possibly toward the 98 area.
On the upside, any recovery would need to reclaim the broken trendline and establish support above the EMA 200 to revive a bullish case. Until that happens, the path of least resistance appears tilted to the downside.
Analysis by Coach Angel
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Disclaimer: Investing is risky. Investors should study the information before making investment decisions.
