US services sector activity surges to 2-year high
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The news: US service sector activity surged in October, hitting a 26-month high, with the ISM non-manufacturing PMI reaching 56, up from 54.9 in September.
The numbers: The growth defied expectations, supported by hiring increases and robust consumer spending, even amid recent Boeing strikes and hurricane disruptions.
Economists polled by Reuters had forecast the services PMI declining to 53.8. New orders slowed slightly to 57.4, while prices for services inputs dipped to 58.1, 1.3 points lower than the 59.4 recorded in September.
Employment climbed to 53, from 48.1 the previous month, marking the highest reading in a year. The reading seemed to contrast with last Friday’s labour report showing employers sharply slowed hiring in October, which analysts attribute to temporary strikes and climate disruptions.
The context: The services sector accounts for more than two-thirds of the world’s biggest economy. A PMI reading above 50 indicates growth.
The strongest sectors included retail trade, transportation and warehousing, while industries like accommodation reported improved material deliveries despite disruptions from a port strike and hurricanes.
The report comes as Americans head to the polls today to elect either Kamala Harris or Donald Trump as their next president, with the economy a key issue for many voters.
It also comes ahead of an expected 25 basis point cut to the Federal Reserve’s key policy interest rate to the 4.50% - 4.75% range.
The sources: Institute for Supply Management , Reuters , Bloomberg
