Economic activity in the US services sector increased in October but at a slower rate than in September, according to the Institute for Supply Management’s Services PMI. The measure of economic activity in the services sector decelerated to a reading of 54.4% in October from a reading of 56.7% in September.
October reflects the lowest reading since May 2020, when the index was 45.2%. Readings above 50.1% in the Services PMI generally indicate expansion of the overall economy.
However, the 12-month average was 58.2%, reflecting consistently strong growth in the services sector, which has expanded for 29 consecutive months.
“Growth continues at a slower rate for the services sector, which has expanded for all but two of the last 153 months,” said Anthony Nieves, chair of the ISM services business survey committee. “The sector had a pullback in growth for the second consecutive month in October due to decreases in business activity, new orders and employment.”
Employment activity in the services sector contracted in October after two consecutive months of growth. The employment activity index portion of the Services PMI registered 49.1%, down 3.9 percentage points from the September reading of 53%.
Comments from respondents include “Unable to fill vacant positions with qualified applicants,” and “Our company has tightened its hiring of new employees month over month due to uncertainty around the strength of the economy.”
The ISM’s index is based on data compiled from a survey of purchasing and supply executives across the US.