BREAKING: ISM Service Index Exceeds Expectations, US500 Rebounds
The ISM Services Index for October rose to 52.4, surpassing the forecast of 50.8 and up from the previous 50.0, signaling stronger growth in the U.S. service sector.
- ISM Prices Paid Subindex: 70.0 (forecast: 68; prior: 69.4)
- ISM New Orders Subindex: 56.2 (forecast: 51.0; prior: 50.4)
- ISM Employment: 48.2 (forecast: 47.6; prior: 47.2)
The Business Activity Subindex surged sharply to 54.3 from 49.9, reflecting renewed expansion and momentum in the sector. New Orders climbed to their highest level since October 2024 at 56.2, indicating rising demand that could sustain growth.
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.
Inflation concerns persist as the Prices Paid index increased slightly to 70.0, marking a three-year high. Contrary to reports of prices "ticking down slightly," this rise suggests service providers continue to transfer higher input costs to consumers, challenging the Fed’s inflation targets.
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.
Summary: The ISM Services Index shows strong sector growth and rising prices, indicating robust demand but complicating the Federal Reserve’s efforts to control inflation.