The ISM Services Index decreased 1.8 percentage points (pp) to 51.8% in October—the tenth consecutive month of expansion for the services sector. However, growth slowed in 9 out of 12 components of the Index.
“Twelve industries reported growth in October. The Services PMI®— by being above 50 percent for the 10th month after a single month of contraction a prior 30-month period of expansion, continues to indicate sustained growth for the sector, though at a slower rate in October,” said Anthony Nieves, Chair of the ISM Services Business Survey Committee.
The Business Activity Index decreased 4.7 pp to 54.1% in October. The Supplier Deliveries Index indicated a return to faster performance in October, registering 47.5%, down 2.9 pp from September. The index returned to contraction territory, indicating that supplier delivery performance was faster in contrast to the ‘slowing’ status from the previous month. The Prices Index decreased 0.3 pp to 58.6%. Respondents commented: “Suppliers are citing increased labor costs — wages, salaries and benefits — as the biggest reason for their price increases,” and “The general outlook for our organization is less positive than anticipated from the beginning of the year.”
The Inventories Index returned to contraction in October, decreasing 4.7 pp to 49.5% and the Employment Index decreased 3.2 pp to 50.2%. Respondents commented that, “Labor pressures continue, particularly in areas that are hard to recruit,” and “The United Auto Workers (UAW) strike is having no impacts so far — our inventory is in good position for now.”
The New Export Orders Index fell 14.9 pp to 48.8%. This decline is the fourth largest decrease ever. While the Imports Index grew 9.4 pp to 60.0%, which is the fifth largest increase ever and the index has indicated expansion in 12 of the last 14 months.
Read the ISM release.