Economic activity in the services sector returned to expansion territory in October. The ISM Services Index indicated expansion at 52.4%, above the 50% breakeven point for the eighth time in 2025.
“In October, the Services PMI registered a reading of 52.4%, 2.4 percentage points higher than the September figure of 50%. The Business Activity Index also returned to expansion territory in October, registering 54.3%, 4.4 percentage points higher than the reading of 49.9 percent recorded in September,” said Steve Miller, CPSM, CSCP, Chair of the Institute for Supply Management (ISM) Services Business Survey Committee. Respondents from the Public Administration services said, “Heightened business activity due to new fiscal year budget. Items made with or utilizing precious metals are up, basic labor is down — though maintaining employees has been more difficult since a return-to-office order was implemented.
“The New Orders Index registered 56.2% in October, 5.8 percentage points higher than the reading of 50.4 percent reported in September. Employment activity remained in contraction territory for the fifth month in a row. The Employment Index registered 48.2 percent, up one percentage point from the September figure of 47.2% and its highest since May’s reading of 50.7%. Respondents from the Management of Companies & Services said, “Uncertainty due to the federal government shutdown has shuttered many non-essential functions. This will lead to project delays and likely hurt our overall fiscal year 2026 expectations. Our sites are funded through the next couple of months, but if the shutdown continues beyond that time, we will expect mass furloughs of our employees.”
The Inventories Index was in contraction territory for its second month in a row, registering 49.5%, a 1.7-percentage point increase compared to the 47.8% reported in September. The Inventory Sentiment Index expanded for the 30th consecutive month, registering 55.5%, down 0.2 pp from September’s figure of 55.7%. The Backlog of Orders Index was in contraction territory for the eighth month in a row, registering 40.8% in October, down 6.5 pp from September’s reading of 47.3%.
Read the ISM release.
