By Jeffry Bartash
ISM services index falls to five-month low 51.8%
The numbers: An ISM barometer of U.S. business conditions at service-oriented companies such as retailers and restaurants slowed in October to five-month low of 51.8%, suggesting the economy has softened.
The reading was below the 53.0% forecast of economists polled by The Wall Street Journal.
The index recorded 53.6% in September
Numbers over 50% are viewed as positive for the economy. The index has hovered between 50% and 55% throughout this year.
“The services sector continues to slow,” said Anthony Nieves, chairman of the survey.
Key details:
The production gauge fell 4.7 points to 54.1%. The new-orders index rose 3.7 points to 55.5%, the most positive aspect of the report.The employment barometer dropped 3.2 points to 50.2%.The prices-paid index, a measure of inflation, was barely changed at 58.6%. “In general, commodity prices are coming down, but some categories, especially labor, are still elevated and will remain so for the immediate future,” an executive in leisure and hospitality told ISM.
Big picture: The economy grew in the third quarter at the fastest pace in a decade, excluding the pandemic years of 2020-21. But higher interest rates and still-high inflation are bound to slow the economy in the waning months of the year. The October ISM report could be an indication of that.
Looking ahead: Some businesses are “optimistic about the current steady and stable business conditions and others concerned about such economic factors as inflation, interest rates and geopolitical events,” Nieves said.
“Employment-related challenges are also prevalent, with comments about increasing labor costs, as well as shortages.”
Market reaction: The Dow Jones Industrial Average and S&P 500 rose in Friday trades after a soft U.S. jobs report.
Investors viewed the report as supporting the view the Federal Reserve will stop raising interest rates.
-Jeffry Bartash
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(END) Dow Jones Newswires
11-03-23 1028ET
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