U.S. service sector activity rises further in October

Business activity throughout the U.S. service sector rose further in October. The seasonally adjusted IHS Markit Services Business Activity Index came in at 55.3 in October, unchanged from September’s index. The latest figure shows a solid rise in overall business activity throughout the nation’s service sector. Furthermore, the pace of growth was slightly more rapid than the long-run series average.

Anecdotal evidence attributed the rise in output to strong client demand and more favorable business conditions. New business received by service providers continued to rise in October. A number of survey respondents noted that the rise was because of stronger business investment. However, the rate of growth eased to a six-month low.

Operating costs rose further in October; however, the pace of inflation weakened to the slowest since March. Panellists stated that inflation was supported by higher raw material and transportation costs, with some linking this to the continued disruption from the hurricanes in August and September. Some surveyed firms implied that resilient demand conditions enabled the rise in output prices. However, the rate of inflation eased to a six-month low.

In the meantime, workforce figures grew at a strong rate that had accelerated from that seen in the previous survey period. Job creation was attributed to larger business requirements and rising client demand. Business expectations among service providers continued to be strong in October, with monitored companies reporting a stronger degree of sentiment than in September, noted Markit. Panellists attributed this to more favorable market conditions and higher client demand.

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