The Institute for Supply Management’s non-manufacturing business activity composite index was 44.4 in October, down from 50.2 in September, on a seasonally adjusted basis, the group said yesterday.
Economists polled by Thomson Reuters had expected a 47.5 level.
An index reading below 50 signals a slowing economy, while a level above 50 suggests expansion.
The prices paid index, closely watched for signs of inflation, slid to 53.4 from 70.0.
The employment index decreased to 41.5 from 44.2
The business activity index fell to 44.2 from 52.1, the new orders index dropped to 44.0 from 50.8, backlog of orders fell to 44.0 from 46.5, new export orders dipped to 50.0 from 50.5, inventories increased to 48.0 from 45.5, inventory sentiment rose to 67.5 from 62.5, the supplier deliveries index slipped to 48.0 from 53.5, and imports grew to 52.0 from 47.5.
“The NMI registered 44.4% in October, 5.8 percentage points lower than the 50.2% registered in September, indicating contraction in the non-manufacturing sector after two consecutive months of growth,” said Anthony Nieves, chairman of the ISM’s non-manufacturing business survey committee.
“The non-manufacturing business activity index decreased 7.9 percentage points to 44.2%. The new orders index decreased 6.8 percentage points to 44%, and the employment index decreased 2.7 percentage points to 41.5%,” he said. “The prices index decreased 16.6 percentage points to 53.4% in October, indicating a slower rate in price increases than in September. This is the lowest reading for the prices index since July 2003 when it registered 51.4%, and is also the largest one-month decline since the index was first reported in 1997. According to the NMI, three non-manufacturing industries reported growth in October. Respondents’ comments indicate ongoing concern about the business environment and the economy.”