Growth in U.S. service sector activity reaccelerated by more than anticipated in the month of October after a pullback in September, according to a report released by the Institute for Supply Management on Tuesday.
The ISM said its non-manufacturing index climbed to 54.7 in October from 52.6 in September, with a reading above 50 indicating growth in the service sector. Economists had expected the index to inch up to 53.2.
The bigger than expected increase by the headline index came as the business activity index rebounded to 57.0 in October from 55.2 in September and the new orders index jumped to 55.6 from 53.7.
The employment index also showed a notable increase, surging up to 53.7 in October from 50.4 percent in September and indicating a reacceleration in the pace of job growth in the service sector.
Meanwhile, the report said the prices index slumped to 56.6 in October from 60.0 in September, pointing to a slowdown in the pace of job growth.
Despite the rebound in the pace of service sector growth, Anthony Nieves, Chair of the ISM Non-Manufacturing Business Survey Committee, noted “respondents continue to be concerned about tariffs, labor resources and the geopolitical climate.”
Last Friday, the ISM released a separate report showing U.S. manufacturing activity continued to contract in the month of October but at a slightly slower pace.
The ISM said its purchasing managers index crept up 48.3 in October from 47.8 in September, although a reading below 50 still indicates a contraction in manufacturing activity. Economists had expected the index to rise to 48.9.
In the previous month, the index fell to its lowest level since hitting 46.3 in June of 2009, the last month of the Great Recession.