The U.S. service sector expanded at its fastest pace in over two years, driven by an increase in hiring. Recent data showed that the Institute for Supply Management's (ISM, Financial) Non-Manufacturing Index for October rose to 56, marking its highest point since July 2022. This figure surpassed the predictions of all but one economist in a Bloomberg survey, with any reading above 50 indicating industry growth.
Measures of new orders and business activity also grew at a solid rate, with readings of 57.4 and 57.2, respectively. This suggests continued economic momentum at the start of the fourth quarter. The ISM employment index jumped nearly five points to 53, the highest since August 2023, reflecting further job growth. Combined with a low unemployment rate and limited layoffs, these factors are expected to support consumer spending in the coming months.
This report depicts a more resilient labor market than last week's monthly employment report, which showed significant hiring slowdowns due to hurricanes and strikes, with non-farm payrolls increasing by only 12,000 in October.
As U.S. voters headed to the polls, the economy remained their top concern in the presidential election. Fourteen industries reported growth in October, notably retail trade, information, transportation, and warehousing, while two sectors experienced declines.
