WASHINGTON (Reuters) – U.S. services sector activity rose in November but new orders remained steady, while a price gauge fell amid the lagged effects of rising interest rates are starting to have a greater impact, shows the monthly survey from the Institute for Supply Management (ISM) published Wednesday.

The ISM services index stood at 52.7, a five-month low, after 51.8 in October. The services sector has been slowing since August after reaching a six-month peak.

Economists polled by Reuters had on average expected a reading of 52.0 in November.

The 50 mark separates growth and contraction in activity.

The Federal Reserve has raised rates a total of 525 basis points over the past 20 months, to raise the federal funds rate target to a range of 5.25% to 5.50%, in order to curb inflation. considered too high.

While the economy continued to boom over the summer, economists expect demand to weaken this quarter, particularly in services, a prospect that would be welcomed by the U.S. central bank in its fight to bring inflation down to 2%.

The stagnation recorded in the component of new orders received by service companies, which stood at 55.5 in November, as in October, should be seen as a first encouraging sign by Fed officials.

Consumer spending also increased moderately in October, while the annual rise in inflation was the lowest in more than two and a half years, according to official data released last Thursday.

The sub-index of prices paid in services increased from 58.6 in October to 58.3 in November.

Some economists consider the ISM subindex of prices paid in services to be a reliable leading indicator of personal consumption expenditures (PCE) inflation, the Fed’s preferred measure of price changes.

Employment in the sector improved to 50.7 in November from 50.2 the previous month.

(Reporting Lindsay Dunsmuir; Claude Chendjou, editing by Kate Entringer)

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