The services sector, including retail, grew in October for the 29th straight month, but that growth came at slower rate than September activity, as recorded in the Institute for Supply Management Services Purchasing Managers Index.
Anthony Nieves, chair of the ISM Services Business Survey Committee, said October’s index rate “is the lowest reading since May 2020, when the index registered 45.2%. The Business Activity Index registered 55.7%, a decrease of 3.4 percentage points compared to the reading of 59.1% in September. The New Orders Index figure of 56.5% is 4.1 percentage points lower than the September reading of 60.6%.
Nieves pointed out that Supplier Deliveries is the only Report On Business index that’s inversed, as a reading of above 50% indicates slower deliveries, which is typical as the economy improves and customer demand increases. The ISM Supplier Deliveries Index registered 56.2%, 2.3 percentage points higher than the 53.9% reported in September.”
“After five straight months of decreases, the Prices Index was up two percentage points in October, to 70.7%,” Nieves stated. “Services businesses still continue to struggle to replenish their stocks, as the Inventories Index contracted for the fifth consecutive month: The reading of 47.2% is up 3.1 percentage points from September’s figure of 44.1%. The Inventory Sentiment Index — 46.4%, down 0.8 percentage point from September’s reading of 47.2% — contracted for the third month in a row.”
According to the report, the composite industries index indicated growth for the 29th consecutive month after a two-month contraction in April and May 2020. Services sector growth continues at a slower rate, although it has expanded for all but two of the last 153 months. The sector had a pullback in growth for the second consecutive month in October due to softer business activity, new orders and employment.
“Supplier deliveries continued to slow, at a faster rate in October,” Nieves maintained. “Based on comments from Business Survey Committee respondents, growth rates and business levels have cooled. There are still challenges in hiring qualified workers, and due to uncertainty regarding economic conditions, some companies are holding off on backfilling open positions. Supply chain and logistical issues persist but are not as encumbering as they were earlier in the year.”
The services industries reporting growth in October were: Mining; Agriculture, Forestry, Fishing & Hunting; Arts, Entertainment & Recreation; Transportation & Warehousing; Accommodation & Food Services; Construction; Utilities; Other Services; Information; Retail Trade; Professional, Scientific & Technical Services; Educational Services; Finance & Insurance; Public Administration; Health Care & Social Assistance; and Wholesale Trade. The two industries reporting an October decrease were: Management of Companies & Support Services, and Real Estate, Rental & Leasing.
