ISM Non-Manufacturing PMI Slightly Misses Expectations

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ISM Non-Manufacturing  PMI

  • October ISM Non-Manufacturing PMI was 57.1 vs. (E) 58.0.

Takeaway

The non-manufacturing (or service sector) October PMI was a slight disappointment as it declined from a 58.6 reading in September, and the details were also a bit underwhelming. New orders (the leading indicator of the report) fell 1.9 points to 59.1, the lowest reading since April. And, this weakness was confirmed by the private firm Markit’s service sector PMI, which also fell to 57.1. The one bright spot was the employment component, which rose to 59.6 from 58.5 in September, a multi-month high (which bodes well for the jobs number Friday).

But, while a slight moderation, the bottom line here is the absolute level of activity of the service sector (which is by far the larger portion of the economy compared to manufacturing) remains strong and comfortably above 50. There is some slight evidence that, on the margin, the pace of activity in the U.S. economy is moderating slightly, but the recovery remains very much intact, and the economy remains generally supportive of stock prices.