The ISM non-manufacturing index moderated in October but, at 57.1, signals domestic growth remains strong despite recent concerns overseas. Hiring remained robust with the employment index strengthening to 59.6.
Service Sector Continues to Grow at Decent Pace
- Although cooling to 57.1, the ISM non-manufacturing index signals that the domestic economy continued to grow at a solid pace in October, despite concerns about growth abroad. While the export orders index fell, it remained in positive territory, and imports rose to the strongest reading in 18 months.
- Over the past six months, the ISM services index has averaged 57.7 versus 55.1 for the same period a year ago
Another Sign of a Strengthening Labor Market
- While the indices on current business activity and new orders edged lower over the month, they remain elevated at 60.0 and 59.1, respectively. Supplier delivery times contracted, but could be shorter due to recent strong hiring and seasonal factors.
- Already at a nine-year high in September, the employment index charged further ahead last month to 59.6 and supports our call for a 250,000 increase in payrolls on Friday.
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