BREAKING: ISM Services Index Surpasses Expectations, US500 Rebounds
The ISM Services Index for October rose to 52.4, exceeding forecasts of 50.8 and up from 50.0 in the previous month, signaling a stronger-than-expected acceleration in the U.S. service sector.
Key Subindexes
- ISM Prices Paid Subindex reached 70.0, above the expected 68 and prior 69.4, hitting a three-year high.
- ISM New Orders Subindex surged to 56.2, beating the forecast of 51.0 and prior 50.4, marking the highest level since October 2024.
- ISM Employment stood at 48.2, slightly better than forecasted 47.6 and previous 47.2.
- Business Activity Subindex jumped sharply to 54.3 from 49.9, highlighting robust expansion and renewed momentum.
The latest ISM Services PMI reading, hitting an eight-month high (up from 50.0 prior), delivers a clear signal that the U.S. service sector is accelerating, making the case for a Federal Reserve rate cut in December significantly weaker.
While you noted prices "ticked down slightly," the data provided shows a slight increase to 70.0. A reading this high is highly inflationary and suggests that service providers continue to pass on elevated input costs to consumers, which directly clashes with the Fed's goal of bringing inflation down to target.
The strong rise in new orders implies sustained momentum in the sector, often leading to further growth. However, the persistently high Prices Paid index highlights ongoing inflationary pressures on service providers.
Summary: The ISM Services Index surged to an eight-month high, reflecting robust growth and inflationary pressures that challenge the likelihood of a December Fed rate cut.
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