ISM services at more than 2 yr high but more mixed under the hood

The October ISM services index rose to 56 from 54.9 and that was 2.2 pts above expectations. That’s also the highest level since July 2022 (measuring direction, not degree of change).

The internals were more mixed though as Business Activity dropped by 2.7 pts m/o/m to 57.2 but after being up 6.6 pts in September. New orders fell 2 pts to 57.4 but after rising by 6.4 pts last month. Backlogs remained below 50 at 47.7 from 48.3. Employment was a bright spot, up by 4.9 pts to 53 from 48.1 in September. Inventories were little changed m/o/m but elevated at 57.2. Supplier deliveries also contributed to the headline gain, up by 4.3 pts but that reflects longer lead times and we can point to the hurricanes as some of the reason. Maybe even the port strikes too. Prices paid fell 2.7 pts but remaining well above 50 at 58.1, though well off the 2022 highs.

The industry breadth improved with 14 of 18 industries surveyed seeing growth vs 12 in the month before. Just 2 saw a contraction in business vs 5 in September.