In October, the US services sector showed continued expansion, with data from the Institute for Supply Management indicating a faster growth rate compared to the previous month. The purchasing managers' index (PMI) rose to 56, the highest level since July 2022, up from 54.9 in September and surpassing the expected consensus of 53.8 based on a Bloomberg survey.
A reading above 50 signals general expansion in the services sector, with the 12-month average now standing at 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 indicated that the longshoremen's strike had less of an impact than feared due to its short duration." As Americans go to the polls for the next presidential election, the ISM survey revealed that 14 services industries reported growth in October.
However, the business activity index fell to 57.2 from September's 59.9, and new orders decreased to 57.4 from 59.4. The employment index, meanwhile, rose 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," said Thomas Feltmate, Senior Economist at TD Economics. Separately, S&P Global reported a slight decline in its services PMI gauge, which ticked down to 55 from 55.2 in the previous month, falling short of the Bloomberg consensus of 55.3.
New orders continued to increase at a solid rate while expectations for business activity rebounded from a low point observed in September, according to S&P Global's data. The S&P Global US composite PMI output index improved to 54.1 from 54 in September. Chris Williamson, chief business economist at S&P Global Market Intelligence, remarked, "Particularly welcome news comes from the cooling inflation picture.
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." Despite the positive performance within the services sector, data from both ISM and S&P Global indicated that the US manufacturing sector remained in contraction territory in October amid ongoing output weakness..