U.S. Services PMI Dips to 54.5% in October as Activity Moderates

The Institute for Supply Management (ISM) reported that its Services PMI registered 54.5% in October, marking the 28th consecutive month of expansion despite a modest slowdown from September’s 54.9% reading. The headline figure slightly missed the market consensus estimate of 54.8%, as cooling demand and output levels offset improvements in the sector's labor market.

The pullback was led by the Business Activity Index, which fell 2.7 percentage points to 53.8%, and the New Orders Index, which dropped to 55.9% from 59.8%. Conversely, the Employment Index climbed 1.3 points to 51.4%, moving further into expansionary territory. Inflationary pressures remained significant, with the Prices Index registering 73.0%. Executives surveyed highlighted persistent headwinds from tariffs, rising fuel costs, and supply chain constraints, contributing to a more cautious near-term outlook for the services sector.