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Economy in Brief

U.S. ISM Services Index Weakens in October
by Tom Moeller  November 3, 2022

• Employment declines sharply.

• Business activity & new orders also decline, but supplier deliveries improve.

• Price index increases.

The Services PMI from the Institute for Supply Management fell to 54.4 during October from 56.7 in September. The figure remained below the peak of 68.4 in November 2021. The Action Economics Forecast Survey expected a reading of 55.5 for October.

Haver Analytics constructs a composite index combining the services index and the manufacturing reading released on Monday. This index fell to 54.0 from 56.1 in September, well below its November 2021 high of 67.6. These series date back to July 1997.

In the latest services survey, the employment index declined to 49.1 and retraced gains during the prior two months. Twenty-one percent of respondents reported more jobs while 24.5% indicated fewer jobs.

Also moving lower, the business activity index fell to 55.7, a five-month low. Twenty-nine percent (NSA) of respondents reported higher activity while 18.2% reported lower activity. The new orders index weakened to 56.5 from 60.6. Twenty-nine percent (NSA) of respondents reported more orders while 18.6% reported fewer orders. Working higher was the supplier deliveries index to 56.2 (NSA) in October, its highest level in three months. It remained down from 75.7 in November of last year. A lessened 6.4% of respondents reported faster delivery speeds while a steady 18.8% reported slower speeds.

Pricing power improved slightly as the prices index rose to 70.7 in October but remained down from a record 84.6 in April. A higher 47.5% (NSA) of respondents reported price increases and a slightly increased 6.9% reported price declines.

The new export orders index declined sharply to 47.7 in October from 65.1 in September. It was the lowest reading in nine months. The imports index eased to 50.4 after rising to 51.3 in September. The order backlog index slipped to 52.2, a five-month low. The inventory change index increased to 47.2, still indicating inventory decumulation. These series are not seasonally adjusted and not included in the ISM Services PMI total.

The ISM figures are available in Haver's USECON database, with additional detail in the SURVEYS database. The expectations figure from Action Economics is in the AS1REPNA database.

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