The Institute
for Supply Management (ISM) reported on Tuesday that its Services PMI came in
at 56.0 per cent in October, recording a gain of 1.1 percentage points from an unrevised September reading of 54.9 per
cent. The latest figure
indicated that economic activity in the U.S. services sector grew at the strongest pace since August 2022 (56.1).
Economists had anticipated
the indicator to decrease to 53.8 in October.
A reading above
50 signals expansion, while a reading below 50 indicates contraction.
According to
the report, the Production index fell by 2.7 percentage points to 57.2 per cent
last month but remained in expansion territory, suggesting the fourth month of increase
in production across the services sector. In addition, the New Orders gauge dropped
by 2.0 percentage points to 57.4 per cent, indicating new orders grew for the fourth
consecutive month. The Inventories indicator slipped by 0.9 percentage point to
58.1 per cent, remaining in expansion territory for the third month in a row. Meanwhile,
the Employment measure surged by 4.9 percentage points to 5.3 per cent, its
highest level since August 2023, indicating employment activity in the services
sector resumed growth in October after a one-month contraction. The Supplier
Deliveries indicator jumped by 4.3 percentage points to 56.4 per cent, implying
slower delivery performance for the second straight month. On the price front, the Prices index decreased by 1.3 percentage
points to 58.1 per cent, indicating that prices paid by services organizations for materials and
services rose in October for the 89th month running.
Commenting on
the data, Steve Miller, Chair of the Institute for Supply Management (ISM)
Services Business Survey Committee, noted that concerns over political
uncertainty were again more prevalent than the previous month. “Impacts from
hurricanes and ports labour turbulence were mentioned frequently, although
several panellists mentioned that the longshoremen's strike had less of an
impact than feared due to its short duration,” he added.