Services Sector Exceeds October Expectations

The services sector improved in October for the 46th consecutive month, according to the Institute for Supply Management's Report on Business released today.

The Institute's Non-Manufacturing Index registered an overall 55.4% rating, up 1 percentage point from September's 54.4% reading and nearly a full point above market analysts' expectations of 54.5%. 

An above-50% reading denotes growth, and this latest report indicates that the services sector is growing at an increasingly fast rate.

ISM Non-Manufacturing Index Chart

ISM Non-Manufacturing Index data by YCharts. 

Delving into details, the business activity component registered the largest gain, up 4.6 points to 59.7%. The all-important new orders index fell 2.8 points to 56.8%, but that number remains a strong sign of future potential expansion. In a positive sign for the labor market, employment headed 3.5 points higher to 56.2%, putting the reading in solid growth territory.

Despite the positive report, not all industries are faring well. While 10 services industries reported growth in October (led by management of companies and support services), eight reported contractions, with arts, entertainment, and recreation citing the largest squeeze.

The ISM said respondents' comments were mixed, with the majority reflecting an uptick in business, although a number of respondents indicated they were negatively impacted by the government shutdown.


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