The Institute for Supply Management (ISM) reported that U.S. services remained in expansion in October, though its index eased to 54.5% and price pressures stayed elevated. The index has stayed above 50%, ISM’s expansion threshold, for 28 straight months. Economists polled by Reuters expected 54.8%, the news agency reported.
Business activity declined 2.7 points to 53.8%, while new orders fell 3.9 points to 55.9%; both remained above 50%. New export orders returned to expansion at 55.2%, up from 46.9%. The Employment Index gained 1.3 percentage points to 51.4%, its second month above the threshold.
Price pressure remained high despite a monthly decline. The Prices Index fell 1 percentage point from 74.0% to 73.0%, marking its seventh reading above 70% in eight months. It has also held above 60% for 23 consecutive months, ISM said.
The Backlog of Orders Index rose 1.4 points to 58.0%, its strongest reading since July 2022, while new orders declined. The Supplier Deliveries Index climbed 3.5 points to 56.7%. ISM interprets that measure in reverse: readings above 50% indicate slower deliveries.
Respondents most often raised tariffs and fuel costs as supply-chain concerns. ISM said many had yet to experience the full effect of higher costs or pass them on to customers, and said the pressures could add to prices if left unmitigated. Steve Miller, chair of ISM’s Services Business Survey Committee, said the survey counted three commodities in short supply, down from seven in September; each was tied to computer technologies.
ISM’s separate manufacturing gauge also rose in October, reaching 55.5% from 54.5% in September and extending that sector’s expansion streak to 10 months. The next Services PMI, covering November, is scheduled for Dec. 3 at 10 a.m. ET.
