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The
Institute for Supply Management (ISM) said on Friday that its
non-manufacturing PMI dropped to a five-month low of 51.8 from
53.6 in September. The Services PMI has been declining since
August, when it rose to the highest level in six months.
A reading above 50 indicates growth in the services industry,
which accounts for more than two-thirds of the economy.
Economists polled by Reuters had forecast the index slipping to
53.0.
Demand for services initially surged as Americans resumed normal
lives after COVID-19 lockdowns. But momentum has ebbed, with
spending swinging back to goods. Spending on goods far outpaced
outlays on services in the third quarter.
A measure of new orders received by services businesses
increased to 55.5 last month from 51.8 in September, which was
the lowest level since December. Export orders slumped, likely
reflecting the dollar's strength against the currencies of the
United States' main trading partners.
Services inflation remained sticky. The services sector is at
the heart of the Federal Reserve's battle to bring inflation
down to its 2% target. Services prices are less responsive to
interest rate hikes. A measure of prices paid for services
businesses for inputs dipped to 58.6 from 58.9 in September.
Some economists view the ISM services prices paid measure as a
good predictor of personal consumption expenditures inflation,
tracked by the U.S. central bank for monetary policy.
A measure of services sector employment fell to 50.2 from 53.4
in September.
(Reporting By Lucia Mutikani; Editing by Chizu Nomiyama)
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