The US services sector demonstrated continued expansion in October, with data from the Institute for Supply Management showing a faster growth rate sequentially, while S&P Global indicated a slight deceleration. The purchasing managers' index from ISM rose to 56 last month, marking the highest reading since July 2022, up from 54.9 in September.
This result surpassed the consensus forecast of 53.8 compiled by Bloomberg, with a reading above 50 indicating general expansion in the services sector economy. Additionally, the 12-month average reached 52.2. Steve Miller, chair of the ISM's services business survey committee, noted, "Concerns over political uncertainty were again more prevalent than the previous month.
Impacts from hurricanes and ports labor turbulence were mentioned frequently, although several panelists mentioned that the longshoremen's strike had less of an impact than feared due to its short duration." As Americans head to polling stations today to elect the country's next president, the ISM survey reveals that 14 services industries reported growth in October.
The business activity index, however, dropped to 57.2 from 59.9 in September, and new orders fell to 57.4 from 59.4. The employment index increased to 53 from 48.1. "With measures of new orders and business activity still at healthy levels, the backbone of consumer spending is likely to remain a sturdy contributor to growth in the fourth quarter and into next year," stated TD Economics Senior Economist Thomas Feltmate. In a separate report, S&P Global indicated its services PMI gauge ticked down to 55 in October from 55.2 the previous month, whereas the Bloomberg-polled consensus was 55.3.
New orders exhibited a "solid" rate of increase, and business activity expectations rebounded from September's 23-month low. The S&P Global US composite PMI output index edged higher to 54.1 last month from 54 in September. "Particularly welcome news comes from the cooling inflation picture," remarked Chris Williamson, chief business economist at S&P Global Market Intelligence.
He added, "Average prices charged for services rose at a sharply reduced rate in October, showing one of the smallest increases seen for over four years, as competition intensified in the services economy." On Friday, data from ISM and S&P Global illustrated that the US manufacturing sector remained in contraction territory in October due to output weakness..