- Prior was 54.9
- Prices paid 73.0 vs 74.0 prior
- New orders 55.9 vs 59.8 prior
- Employment 51.4 vs 50.1 prior
- Business activity 53.8 vs 56.5 prior
This is a step back from September and suggests there is no big acceleration ongoing in the US economy but that services are still strong. Prices paid are extremely elevated but ticked dow. There has been no dollar reaction to the report.
For background, the Institute for Supply Management’s Services PMI is one of the most closely watched monthly gauges of the US economy. It’s released at 10 am ET on the third business day of the month, two days after its manufacturing counterpart, and is based on a survey of purchasing and supply executives at services firms. The report was known as the non-manufacturing index until 2020.
Like other PMIs, it’s a diffusion index where readings above 50 signal expansion and below 50 signal contraction. The headline is a composite of four equally weighted sub-indexes: business activity, new orders, employment and supplier deliveries. Because services make up the bulk of US economic activity and employment, the survey is often seen as a better reflection of the broader economy than the manufacturing ISM.
The prices index is frequently the most market-moving part of the report. It measures the share of firms paying higher prices for inputs and has become a key early signal for services inflation, which the Federal Reserve watches closely. The employment index offers an early read on hiring, often scrutinized ahead of the monthly jobs report.
Other components include inventories, backlog of orders, new export orders, imports and inventory sentiment. The report also lists how many of 18 services industries reported growth and includes anonymous respondent comments on demand, costs, tariffs and policy, which are widely quoted.
ISM data generally carry more weight with markets than the S&P Global services PMI because of their longer history and larger following. A surprise in the headline or prices index can move Treasury yields, the US dollar and equities, particularly when the economy appears to be at a turning point.
