WASHINGTON (MaceNews) – The momentum of the dominant services sector of the economy showed improvement beyond expectations in October, at 52.4 reading after September’s 50.0 index level, but hiring had continued to soften and suggests more of that to come.
The chief of the purchasing managers survey, Steve Miller, told reporters that in the context of an overall downward trend since February 2022, the October spike was welcome but not entirely a significant departure from the long-term trend.
Asked by Mace News whether he has a sense a new rebound path has begun on the report was just a fluke, he said, “I wish I knew. The numbers are very similar to August.. The really positive thing for me is that, even with the (government) shutdown we’re seeing strength.”
During the shutdown in the first Trump administration, which ended after 35 days, the ISM index lost 1.6 percentage points “and this time we saw a 2.4 percent increase,” he said. This time retail trade went into expansion, along with agriculture, real estate rental leasing, The month’s improvement in the accommodations and food service industry “is a really great sign.”
That category was one of 11 that showed improvement, one more than in September. Declining included arts and entertainment, management and support services and public administration. There were several survey participant comments, Miller said, showing concern about the government shutdown that got underway in October. Should the shutdown extend longer, they suggested, there will be industry shutdowns and increased layoffs. The government shutdown became the longest ever on Wednesday.
The employment index moved up to 48.2 from September’s 47.2 and showed “a lack of confidence in the continued strength of the economy.” Since the ISM reading generally anticipates the government’s still missing jobs report, that suggests more softening ahead for jobs, Miller said,
October’s production index surged to 54.3 from 49.9 and new orders similarly jumped to 56.2 from 50.4. Prices edged higher to 70.0 from 69.4 and survey respondents included several about the effect of tariffs on price increases.
The overall report added to perceptions that the economy has improved even before the second Federal Reserve rate cut last week. Yet that improvement through October has been relatively slight. Expectations for the October services ISM report had been in the neighborhood of 51.0.