The U.S. services sector expanded in October as the non-manufacturing business activity composite index was 60.1, compared to 59.8 in September, on a seasonally adjusted basis, the Institute for Supply Management reported Friday.

“This is the highest NMI reading since the index’s debut in 2008,” ISM Chair Anthony Nieves said in a release.

An index reading below 50 signals a slowing economy, while a level above 50 suggests expansion.

Economists polled by Thomson Reuters had expected a 58.5 level.

The prices paid index fell to 62.7 from 66.3. The employment index gained to 57.5 from 56.8.

The business activity/production index grew to 62.2 from 61.3, the new orders index was at 62.8, down from 63.0; backlog of orders dropped to 53.5 from 56.0; new export orders increased to 60.0 from 56.0; inventories rose to 52.5 from 51.5; inventory sentiment gained to 61.0 from 58.5; the supplier deliveries index remained at 58.0; and imports held at 52.0.

Members' general comments on business in the month included:

  • “Increasing commodity pricing along with rising construction cost is a concern in [the] quarter ahead.” (Accommodation & Food Services)
  • “Business is strong, driven by large upticks in business from clients in the retail industry. Seasonal surge is starting out stronger than in a normal year.” (Management of Companies & Support Services)
  • “The current hurricane damage will result in a shortage of some building materials and draw labor forces away from our area.” (Construction)
  • “Positive trends continue. Business activity/results good. Revenue and net profit are above plan.” (Finance & Insurance)
  • “We continue to struggle with the ‘unknowns’ around Obamacare, and its impacts on our health care and insurance businesses.” (Health Care & Social Assistance)
  • “Business activity with oil companies remains flat. Oil field services, midstream, downstream and petrochemical sectors remain strong.” (Professional, Scientific & Technical Services)
  • “Business levels increased due to hurricane recovery efforts.” (Real Estate, Rental & Leasing)
  • “Outlook is favorable. Labor is in short supply and is constraining growth.” (Wholesale Trade)
  • “Uptick based on replacement vehicle activity in hurricane-impacted areas of Texas and Florida.” (Retail Trade)

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Gary Siegel

Gary Siegel

Gary Siegel has been at The Bond Buyer since 1989, currently covering economic indicators and the Federal Reserve system.