America’s service industries expanded in October at the fastest rate since August 2005, indicating the biggest part of the economy is gathering strength, a survey from the Institute for Supply Management showed Nov. 3.
Highlights of ISM Non-Manufacturing for October
• Non-manufacturing index rose to 60.1 (estimated 58.5) from 59.8; readings above 50 indicate growth
• Gauge of business activity climbed to a six-month high of 62.2 from 61.3.
• Measure of new orders little changed at 62.8 after 63.
• Employment gauge climbed to 57.5, highest since May, from 56.8 .
The unexpected acceleration in the ISM gauge shows momentum was building at the start of the fourth quarter for the industries that account for almost 90 percent of the economy and include sectors such as utilities, retailing, health care, and construction. The pickup stands in contrast to manufacturing, which grew at a slightly slower — albeit still robust — rate as reported by the Tempe, Arizona-based ISM earlier this week.
A measure of service-industry supplier delivery times remained at an almost 12-year high last month, indicating long lead times for materials were still an issue for companies.
In September, the gauge rose by the most since 1997 as energy and chemical producers around Houston were recovering from Hurricane Harvey. That’s also kept prices elevated.
Meanwhile, the ISM’s non-manufacturing export index reached a six-month high, underscoring a general pickup in global demand.
“We always like to see how it trends out for two or three months, but all indications are we’ll see this continued strength in this sector — at what rate of growth remains to be seen,” Anthony Nieves, chairman of the ISM non-manufacturing survey, said on a conference call with reporters.
•Sixteen industries reported growth in October, including transportation and warehousing, mining, real estate, finance and insurance as well as health care and social assistance. Two industries saw a contraction: educational services and arts, entertainment and recreation.
• Index of supplier deliveries held at 58 to match the highest since November 2005; higher readings indicate slower delivery times and also boost the overall index.
• Gauge of order backlogs fell to 53.5 from 56; export orders measure climbed to 60 from 56, the biggest monthly advance since March.
• Prices-paid index eased to 62.7 from 66.3.