MNI INTERVIEW: US Service Strength To Persist Into 2025-ISM
MNI (WASHINGTON) - U.S. service sector activity looks set to stay robust in coming months as new orders boom, though growth could soften a bit into the holidays after a drag on supplier deliveries from two hurricanes and a port strike temporarily boosted the October reading, Institute for Supply Management non-manufacturing survey chief Steve Miller told MNI.
The PMI could see a slight step back in November and December without the weather and strike factors, and especially if election uncertainty drags on, Miller said. The ISM services PMI rose for a fourth straight month to 56.0 from 54.9 in September, its highest since July 2022 and better than analysts expected.
"I wouldn’t be surprised if in November we see a little pullback to 53 or 54. It’s not unusual to see cooling in November and December for new orders but I expect new order strength to continue," he said. That index fell 2 points to 57.4 but remains above the roughly 55 level seen a year earlier.
Business activity also grew slower in the month but employment jumped to 53.0, its best since August 2023. The supplier deliveries index surged 4 points to 56.4 -- signaling a slowdown in delivery times, and artificially raising the headline number by roughly a point, according to Miller.
"The positive responses that we’re getting across more industries are leading to that PMI number shifting up. We had 14 out of 18 industries responding they’re in expansion territory, and that’s up from last month," Miller said in an interview.
SIZABLE EMPLOYMENT INCREASE
The jump in employment index last month reflected the shift from six industries in expansion and nine in contraction the previous month, to nine in expansion and five contraction in October, Miller noted.
"We had a modest expansion in July and August and a slight contraction in September. That seems to be consistent and confirmed by the Labor Department downward revisions in August and September," he said. "In October we’re seeing positive responses across the board and especially in the retail area and transportation."
The retail sector also led overall growth in October, marking a reversal after five months in contraction, Miller said.
"Employment has been in expansion and I see that holding pretty firm as well next month," he said.