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ISM Non-Manufacturing Index jumped to 66.7% in October
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Economic activity in the services sector grew in October for the 17th month in a row — with the rate of expansion setting a record for the fourth time in 2021 — say the nation's purchasing and supply executives in the latest Services ISM® Report On Business®.
The report was issued today by Anthony Nieves, CPSM, C.P.M., A.P.P., CFPM, Chair of the Institute for Supply Management® (ISM®) Services Business Survey Committee: “In October, the Services PMI® registered another all-time high of 66.7 percent, 4.8 percentage points above September’s reading of 61.9 percent. This figure exceeds the former all-time high of 64.1 percent in July; previous records were set in May (64 percent) and March (63.7 percent). The data quickly explains the elevated Services PMI® reading, as two of the four equally weighted subindexes that directly factor into the composite index set all-time highs: The Business Activity Index reached 69.8 percent, an increase of 7.5 percentage points compared to the reading of 62.3 percent in September, and the New Orders Index hit 69.7 percent, up 6.2 percentage points from last month’s figure of 63.5 percent. (The other two subindexes are Employment and Supplier Deliveries, both also in expansion territory in October.)
“The Supplier Deliveries Index registered 75.7 percent, up 6.9 percentage points from September’s reading of 68.8 percent. The all-time high is 78.3 percent, recorded in April 2020. (Supplier Deliveries is the only ISM® Report On Business® index that is inversed; a reading of above 50 percent indicates slower deliveries, which is typical as the economy improves and customer demand increases.)
“Demand shows no signs of slowing, reflected by two other subindexes in October. The Backlog of Orders Index set a record of 67.3 percent, 5.4 percentage points higher than the September reading of 61.9 percent; the previous high of 65.8 percent was set in June. The Prices Index reached its second-highest reading ever at 82.9 percent, up 5.4 percentage points from the September figure of 77.5 percent and exceeded only by September 2005 (83.5 percent). In response, services businesses are struggling to stock up, as the Inventories Index (42.2 percent, down 3.9 percentage points from September’s reading of 46.1 percent) and the Inventory Sentiment Index (37.3 percent, a decrease of 9 percentage points from 46.3 percent the previous month) were near record lows in October.
Nieves continues, “According to the Services PMI®, all 18 services industries reported growth. The composite index indicated growth for the 17th consecutive month after a two-month contraction in April and May 2020. In October, strong growth continued for the services sector, which has expanded for all but two of the last 141 months. However, ongoing challenges — including supply chain disruptions and shortages of labor and materials — are constraining capacity and impacting overall business conditions.”
INDUSTRY PERFORMANCE
The 18 services industries reporting growth in October — listed in order — are: Retail Trade; Transportation & Warehousing; Real Estate, Rental & Leasing; Arts, Entertainment & Recreation; Other Services; Utilities; Construction; Information; Educational Services; Wholesale Trade; Accommodation & Food Services; Health Care & Social Assistance; Agriculture, Forestry, Fishing & Hunting; Management of Companies & Support Services; Finance & Insurance; Professional, Scientific & Technical Services; Public Administration; and Mining.
Posted: November 3, 2021 Wednesday 10:00 AM