Economic activity in the services sector expanded for the fourth consecutive month in October, according to the Institute for Supply Management (ISM) services Report On Business. The services PMI registered 56%, which is the highest reading since July 2022 and indicates sector expansion for the 50th time in 53 months. The report was issued by Steve Miller, chair of the ISM services business survey committee.
“In October, the services PMI registered 56%, 1.1 percentage points higher than September’s figure of 54.9%. The reading in October marked the eighth time the composite index has been in expansion territory this year. The business activity index registered 57.2% in October, 2.7 percentage points lower than the 59.9% recorded in September, indicating a fourth month of expansion after a contraction in June. The new orders index decreased to 57.4% in October, two percentage points lower than September’s figure of 59.4%. The employment index landed in expansion territory for its third time in four months; the reading of 53% is a 4.9-percentage point increase compared to the 48.1% recorded in September,” Miller said. “The supplier deliveries index registered 56.4%, 4.3 percentage points higher than the 52.1% recorded in September. The index remained in expansion territory for the second month in a row — indicating slower supplier delivery performance — after two months in contraction or ‘faster’ territory. (Supplier deliveries is the only ISM Report On Business index that is inversed; a reading of above 50% indicates slower deliveries, which is typical as the economy improves and customer demand increases.)”
“The prices index registered 58.1% in October, a 1.3-percentage point decrease from September’s reading of 59.4%. The inventories index remained in expansion territory for a third month in October after two consecutive months of contraction, registering 57.2%, a decrease of 0.9 percentage point from September’s figure of 58.1%. The inventory sentiment index expanded for the 18th consecutive month, but the reading of 53%, down 1 percentage point from September’s reading of 54%, is its lowest in that time period. The backlog of orders index remained in contraction territory for a third consecutive month, registering 47.7% in October, a 0.6-percentage point decrease from the September reading of 48.3%,” Miller said. “Fourteen industries reported growth in October, up two from the 12 industries reporting growth in September. The services PMI has expanded in 20 of the last 22 months dating back to January 2023, and the October reading is 3.7 percentage points above its average of 52.3% for 2024. The increase in the services PMI in October was driven by boosts of more than 4 percentage points for both the employment and supplier deliveries indexes. The business activity and new orders indexes both dropped by at least two percentage points. Each of the four subindexes are now above their averages for 2024. The supplier deliveries index remained in expansion in October, indicating slower delivery performance. 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.”
The 14 services industries reporting growth in October — listed in order — are:
Retail trade
Information
Transportation and warehousing
Accommodation and food services
Finance and insurance
Construction
Mining
Public administration
Utilities
Real estate, rental and leasing
Educational services
Professional, scientific and technical services
Health care and social assistance
Wholesale trade
The two industries reporting a contraction in the month of October are:
Other services
Management of companies and support services
