Services PMI® at 56%; October 2024 Services ISM® Report On Business®

Business Activity Index at 57.2%; New Orders Index at 57.4%; Employment Index at 53%; Supplier Deliveries Index at 56.4%

TEMPE, Ariz., Nov. 5, 2024 /PRNewswire/ — Economic activity in the services sector expanded for the fourth consecutive month in October, say the nation’s purchasing and supply executives in the latest Services ISM^® Report On Business^®. The Services PMI^® registered 56 percent, which is the highest reading since July 2022 and indicates sector expansion for the 50th time in 53 months.

The report was issued today by Steve Miller, CPSM, CSCP, Chair of the Institute for Supply Management^® (ISM^®) Services Business Survey Committee: “In October, the Services PMI^® registered 56 percent, 1.1 percentage points higher than September’s figure of 54.9 percent. The reading in October marked the eighth time the composite index has been in expansion territory this year. The Business Activity Index registered 57.2 percent in October, 2.7 percentage points lower than the 59.9 percent recorded in September, indicating a fourth month of expansion after a contraction in June. The New Orders Index decreased to 57.4 percent in October, 2 percentage points lower than September’s figure of 59.4 percent. The Employment Index landed in expansion territory for its third time in four months; the reading of 53 percent is a 4.9-percentage point increase compared to the 48.1 percent recorded in September.

“The Supplier Deliveries Index registered 56.4 percent, 4.3 percentage points higher than the 52.1 percent recorded in September. The index remained in expansion territory for the second month in a row — indicating slower supplier delivery performance — after two months in contraction or ‘faster’ territory. (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.)

“The Prices Index registered 58.1 percent in October, a 1.3-percentage point decrease from September’s reading of 59.4 percent. The Inventories Index remained in expansion territory for a third month in October after two consecutive months of contraction, registering 57.2 percent, a decrease of 0.9 percentage point from September’s figure of 58.1 percent. The Inventory Sentiment Index expanded for the 18th consecutive month, but the reading of 53 percent, down 1 percentage point from September’s reading of 54 percent, is its lowest in that time period. The Backlog of Orders Index remained in contraction territory for a third consecutive month, registering 47.7 percent in October, a 0.6-percentage point decrease from the September reading of 48.3 percent.

“Fourteen industries reported growth in October, up two from the 12 industries reporting growth in September. The Services PMI^® has expanded in 20 of the last 22 months dating back to January 2023, and the October reading is 3.7 percentage points above its average of 52.3 percent for 2024.”

Miller continues, “The increase in the Services PMI^® in October was driven by boosts of more than 4 percentage points for both the Employment and Supplier Deliveries indexes. The Business Activity and New Orders indexes both dropped by at least 2 percentage points. Each of the four subindexes are now above their averages for 2024. The Supplier Deliveries Index remained in expansion in October, indicating slower delivery performance. Concerns over political uncertainty were again more prevalent than the previous month. Impacts from hurricanes and ports labor turbulence were mentioned frequently, although several panelists mentioned that the longshoremen’s strike had less of an impact than feared due to its short duration.”

INDUSTRY PERFORMANCE
The 14 services industries reporting growth in October — listed in order — are: Retail Trade; Information; Transportation & Warehousing; Accommodation & Food Services; Finance & Insurance; Construction; Mining; Public Administration; Utilities; Real Estate, Rental & Leasing; Educational Services; Professional, Scientific & Technical Services; Health Care & Social Assistance; and Wholesale Trade. The two industries reporting a contraction in the month of October are: Other Services; and Management of Companies & Support Services.

WHAT RESPONDENTS ARE SAYING

• “Material availability and delivery continues to improve. The port strike had an impact, as we had to divert shipments, but the overall costs are not material. Services cost remains elevated but easier to negotiate.” [Accommodation & Food Services]
• “Monitoring inventories much closer than in the past. We’re refilling inventories for the fall and winter seasons are lower level than normal, but those decisions are easy to understand.” [Agriculture, Forestry, Fishing & Hunting]
• “Business is good. Building backlog. Commercial Construction is strong. Commercial Service is busy. All other areas are level.” [Construction]
• “Hurricane Helene seriously damaged an IV production plant in North Carolina, which was 60 percent of all national supply of IV bag fluid/solution. We are now starting to experience shortages. In addition, two hurricanes hit Florida, which impacted many of our lab vendors. Plus, the port workers’ strike impacts shipments of materials that our (U.S.) labs use to manufacture medicine and medical supplies. We anticipate a rise in prices and longer wait times, and most likely, shortages of some supplies.” [Health Care & Social Assistance]
• “Sadly, the recent hurricanes/tornadoes, and any future climate-related catastrophes, are good for the equipment sales and rental businesses. That and the continued infrastructure spending.” [Information]
• “Revenue cycles are lengthening. Good sales, but longer service periods. Commodity pricing is stabilizing as inflation concerns ease. Business is in a steady state, with everyone holding an even keel awaiting U.S. election results.” [Professional, Scientific & Technical Services]
• “Hurricane impacts have affected supplier deliveries.” [Real Estate, Rental & Leasing]
• “Port strikes did not impact our supply chain, but we confirmed all our strategic vendors had plans in place should they have an impact.” [Retail Trade]
• “Business is booming, nothing slowing down. Prices continue to increase slightly.” [Utilities]
• “The economy is still causing issues within our business and that of our suppliers.” [Wholesale Trade]

Services ISM^® Report On Business^® data is seasonally adjusted for the Business Activity, New Orders, Employment and Prices indexes. Manufacturing ISM^® Report On Business^® data is seasonally adjusted for New Orders, Production, Employment and Inventories indexes.

*Number of months moving in current direction.

COMMODITIES REPORTED UP/DOWN IN PRICE, AND IN SHORT SUPPLY

Commodities Up in Price
Containers; Copper Wire; Labor (47); Lumber* (2); and Steel Products.

Commodities Down in Price
Diesel Fuel; Fuel (2); Lumber* (2); and Oil Based Products.

Commodities in Short Supply
Construction Contractors; Electrical Equipment (5); High Voltage Breakers; IV Solutions; Labor (2); Labor — Technical; and Transformers (5).

Note: The number of consecutive months the commodity is listed is indicated after each item.
*Indicates both up and down in price.

OCTOBER 2024 SERVICES INDEX SUMMARIES

Services PMI^®
In October, the Services PMI^® registered 56 percent, a 1.1-percentage point increase compared to the September reading of 54.9 percent. This is the index’s highest level since a reading of 56.4 percent in July 2022. A reading above 50 percent indicates the services sector economy is generally expanding; below 50 percent indicates it is generally contracting.

A Services PMI^® above 49 percent, over time, generally indicates an expansion of the overall economy. Therefore, the October Services PMI^® indicates the overall economy is expanding for the fourth straight month. Miller says, “The past relationship between the Services PMI^® and the overall economy indicates that the Services PMI^® for October (56 percent) corresponds to a 2.3-percentage point increase in real gross domestic product (GDP) on an annualized basis.”

SERVICES PMI^® HISTORY

Business Activity
ISM^®‘s Business Activity Index registered 57.2 percent in October, 2.7 percentage points lower than the 59.9 percent recorded in September, a fourth month of expansion after contracting in June for the first time since May 2020. The Business Activity Index has been in expansion territory for 52 out of 53 months since its coronavirus pandemic lows. Comments from respondents include: “Seeing emerging projects in our technology business line, as well as in energy-related projects, where many customers are looking forward — post-election — to release their next phases” and “Peak of government procurement cycle.”

The nine industries reporting an increase in business activity for the month of October — listed in order — are: Finance & Insurance; Retail Trade; Transportation & Warehousing; Information; Construction; Public Administration; Educational Services; Professional, Scientific & Technical Services; and Utilities. The two industries reporting a decrease in business activity for the month of October are: Other Services; and Management of Companies & Support Services. Seven Industries reported no change in business activities in October.

New Orders
ISM^®‘s New Orders Index registered 57.4 percent in October, 2 percentage points lower than the reading of 59.4 percent registered in September. The index was in expansion for the fourth consecutive month after contracting in June for just the second time since May 2020. Comments from respondents include: “More construction requests” and “Slightly lower due to holding back funds until after the U.S. presidential election.”

The 12 industries reporting an increase in new orders for the month of October — listed in order — are: Accommodation & Food Services; Finance & Insurance; Information; Transportation & Warehousing; Other Services; Retail Trade; Public Administration; Management of Companies & Support Services; Construction; Educational Services; Utilities; and Professional, Scientific & Technical Services. The three industries reporting a decrease in new orders for the month of October are: Agriculture, Forestry, Fishing & Hunting; Wholesale Trade; and Health Care & Social Assistance.

Employment
Employment activity in the services sector expanded in October for the third time in four months. The Employment Index registered 53 percent, up 4.9 percentage points from the September figure of 48.1 percent and its highest level since August 2023 (54.1 percent). Comments from respondents include: “Hiring seasonal labor for holiday peak activity” and “We have lost employees due to normal attrition and are having issues backfilling these positions.”

The nine industries reporting an increase in employment in October — listed in order — are: Mining; Accommodation & Food Services; Retail Trade; Utilities; Construction; Wholesale Trade; Information; Public Administration; and Professional, Scientific & Technical Services. The five industries reporting a decrease in employment in October are: Agriculture, Forestry, Fishing & Hunting; Finance & Insurance; Management of Companies & Support Services; Educational Services; and Health Care & Social Assistance.

Supplier Deliveries
In October, the Supplier Deliveries Index indicated slower performance for the second month in a row. The index registered 56.4 percent, up 4.3 percentage points from the 52.1 percent recorded in September. A reading above 50 percent indicates slower deliveries, while a reading below 50 percent indicates faster deliveries. Comments from respondents include: “Deliveries are impacted by the recent hurricanes” and “Data is coming from government agencies, which are swamped with the elections.”

The 12 industries reporting slower deliveries in October — in the following order — are: Agriculture, Forestry, Fishing & Hunting; Real Estate, Rental & Leasing; Health Care & Social Assistance; Educational Services; Retail Trade; Utilities; Public Administration; Transportation & Warehousing; Professional, Scientific & Technical Services; Wholesale Trade; Construction; and Information. No industry reported faster supplier deliveries for the month of October. Six industries reported no change in supplier deliveries.

Inventories
The Inventories Index remained in expansion territory for the third consecutive month. The reading of 57.2 percent was a 0.9-percentage point decrease compared to the 58.1 percent reported in September. Of the total respondents in October, 44 percent indicated they do not have inventories or do not measure them. Comments from respondents include: “Holding additional IV solution inventory” and “Hurricane-driven demand filled from on-hand inventory.”

The eight industries reporting an increase in inventories in October — in the following order — are: Real Estate, Rental & Leasing; Transportation & Warehousing; Professional, Scientific & Technical Services; Retail Trade; Health Care & Social Assistance; Utilities; Educational Services; and Information. The four industries reporting a decrease in inventories in October are: Mining; Other Services; Management of Companies & Support Services; and Public Administration. Six industries reported no change in inventories in October as compared to September.

Prices
Prices paid by services organizations for materials and services increased in October for the 89th consecutive month. The Prices Index registered 58.1 percent, 1.3 percentage points lower than the 59.4 percent recorded in September. The October reading is the 24th in a row below 70 percent, including 18 of the last 19 months at or below 60 percent. Before that, from September 2021 to June 2022, there were 10 straight months of readings near or above 80 percent.

Fifteen of the 18 services industries reported an increase in prices paid during the month of October, in the following order: Accommodation & Food Services; Construction; Mining; Other Services; Arts, Entertainment & Recreation; Retail Trade; Information; Educational Services; Utilities; Wholesale Trade; Public Administration; Finance & Insurance; Professional, Scientific & Technical Services; Health Care & Social Assistance; and Transportation & Warehousing. The only industry reporting a decrease in prices paid in October is Management of Companies & Support Services.

NOTE: Commodities reported as up in price and down in price are listed in the commodities section of this report.

Backlog of Orders
The ISM^® Services Backlog of Orders Index contracted in October for the third month in a row and the fifth time in 2024. The reading of 47.7 percent is 0.6 percentage point lower than the 48.3 percent reported in September. Of the total respondents in October, 41 percent indicated they do not measure backlog of orders. Respondent comments include: “Fewer orders backlogged than the previous month; suppliers have been able to fulfill more orders” and “Annual ramp-up of pre-holiday (orders) means a lower backlog this month.”

The four industries reporting an increase in order backlogs in October are: Arts, Entertainment & Recreation; Information; Finance & Insurance; and Transportation & Warehousing. The nine industries reporting a decrease in order backlogs in October — in the following order — are: Agriculture, Forestry, Fishing & Hunting; Other Services; Professional, Scientific & Technical Services; Construction; Retail Trade; Public Administration; Management of Companies & Support Services; Wholesale Trade; and Health Care & Social Assistance.

New Export Orders

Orders and requests for services and other non-manufacturing activities to be provided outside of the U.S. by domestically based companies increased in October for the sixth consecutive month after contracting in April and expanding for 11 of the 12 months before that, with the lone contraction in October 2023. The New Export Orders Index registered 51.7 percent, a 5-percentage point decrease from the 56.7 percent reported in September. Of the total respondents in October, 71 percent indicated they do not perform, or do not separately measure, orders for work outside of the U.S. Respondent comments include: “New U.S. government awards” and “Projects in emerging markets keep developing, and new orders are being put in place for non-U.S. sites like Brazil and Colombia.”

The six industries reporting an increase in new export orders in October — in the following order — are: Information; Management of Companies & Support Services; Transportation & Warehousing; Utilities; Wholesale Trade; and Professional, Scientific & Technical Services. The two industries reporting a decrease in new export orders in October are: Retail Trade; and Other Services. Ten industries reported no change in new export orders in October.

Imports
The Imports Index expanded for the fourth consecutive month in October, registering 50.2 percent, 2.5 percentage points lower than the 52.7 percent reported in September. The index has indicated expansion in 21 of the last 26 months, with contractions in May and June of this year, March and December 2023, and an “unchanged” status (a reading of 50 percent) in May 2023. Seventy-one percent of respondents reported that they do not use, or do not track the use of, imported materials. Respondent comments include: “U.S. imports in October are reported to have decreased compared to the previous month, with a notable drop in the price of imported goods — particularly fuel prices — contributing to the decline” and “Transition of packing materials to offshore suppliers to reduce costs.”

The five industries reporting an increase in imports for the month of October are: Accommodation & Food Services; Agriculture, Forestry, Fishing & Hunting; Construction; Transportation & Warehousing; and Wholesale Trade. The two industries reporting a decrease in imports in October are: Other Services; and Professional, Scientific & Technical Services. Eleven industries reported no change in imports in October.

Inventory Sentiment
The ISM^® Services Inventory Sentiment Index grew for the 18th consecutive month in October after one month of contraction in April 2023, preceded by four consecutive months of growth and four months of contraction from August to November 2022. The index registered 53 percent, a 1-percentage point decrease from September’s figure of 54 percent and the lowest reading since April 2023 (48.9 percent). This reading indicates that respondents feel their inventories are too high when correlated to industry levels.

The seven industries reporting sentiment that their inventories were too high in October — listed in order — are: Other Services; Mining; Wholesale Trade; Utilities; Professional, Scientific & Technical Services; Construction; and Health Care & Social Assistance. The four industries reporting feeling that their inventories were too low in October are: Management of Companies & Support Services; Educational Services; Agriculture, Forestry, Fishing & Hunting; and Transportation & Warehousing. Seven industries reported no change in October.

About This Report
DO NOT CONFUSE THIS NATIONAL REPORT with the various regional purchasing reports released across the country. The national report’s information reflects the entire U.S., while the regional reports contain primarily regional data from their local vicinities. Also, the information in the regional reports is not used in calculating the results of the national report. The information compiled in this report is for the month of October 2024.

The data presented herein is obtained from a survey of supply executives in the services sector based on information they have collected within their respective organizations. ISM^® makes no representation, other than that stated within this release, regarding the individual company data collection procedures. The data should be compared to all other economic data sources when used in decision-making.

Data and Method of Presentation
The Services ISM^® Report On Business^® (formerly the Non-Manufacturing ISM^® Report On Business^®) is based on data compiled from purchasing and supply executives nationwide. Membership of the Services Business Survey Committee (formerly Non-Manufacturing Business Survey Committee) is diversified by NAICS, based on each industry’s contribution to gross domestic product (GDP). The Services Business Survey Committee responses are divided into the following NAICS code categories: Agriculture, Forestry, Fishing & Hunting; Mining; Utilities; Construction; Wholesale Trade; Retail Trade; Transportation & Warehousing; Information; Finance & Insurance; Real Estate, Rental & Leasing; Professional, Scientific & Technical Services; Management of Companies & Support Services; Educational Services; Health Care & Social Assistance; Arts, Entertainment & Recreation; Accommodation & Food Services; Public Administration; and Other Services (services such as Equipment & Machinery Repairing; Promoting or Administering Religious Activities; Grantmaking; Advocacy; and Providing Dry-Cleaning & Laundry Services, Personal Care Services, Death Care Services, Pet Care Services, Photofinishing Services, Temporary Parking Services, and Dating Services). The data are weighted based on each industry’s contribution to GDP. According to BEA estimates (the average of the fourth quarter 2022 GDP estimate and the GDP estimates for first, second, and third quarter 2023, as released on December 21, 2023), the six largest services sectors are: Real Estate, Rental & Leasing; Public Administration; Professional, Scientific, & Technical Services; Health Care & Social Assistance; Information; and Finance & Insurance.

Survey responses reflect the change, if any, in the current month compared to the previous month. For each of the indicators measured (Business Activity, New Orders, Backlog of Orders, New Export Orders, Inventory Change, Inventory Sentiment, Imports, Prices, Employment and Supplier Deliveries), this report shows the percentage reporting each response and the diffusion index. Responses represent raw data and are never changed. Data is seasonally adjusted for Business Activity, New Orders, Prices and Employment. All seasonal adjustment factors are subject annually to relatively minor changes when conditions warrant them. The remaining indexes have not indicated significant seasonality.

The Services PMI^® is a composite index based on the diffusion indexes for four of the indicators with equal weights: Business Activity (seasonally adjusted), New Orders (seasonally adjusted), Employment (seasonally adjusted) and Supplier Deliveries. Diffusion indexes have the properties of leading indicators and are convenient summary measures showing the prevailing direction of change and the scope of change. An index reading above 50 percent indicates that the services economy is generally expanding; below 50 percent indicates that it is generally declining. Supplier Deliveries is an exception. A Supplier Deliveries Index above 50 percent indicates slower deliveries and below 50 percent indicates faster deliveries.

A Services PMI^® above 49 percent, over time, indicates that the overall economy, or gross domestic product (GDP), is generally expanding; below 49 percent, it is generally declining. The distance from 50 percent or 49 percent is indicative of the strength of the expansion or decline.

The Services ISM^® Report On Business^® survey is sent out to Services Business Survey Committee respondents the first part of each month. Respondents are asked to ONLY report on U.S. operations for the current month. ISM^® receives survey responses throughout most of any given month, with the majority of respondents generally waiting until late in the month to submit responses to give the most accurate picture of current business activity. ISM^® then compiles the report for release on the third business day of the following month.

The industries reporting growth, as indicated in the Services ISM^® Report On Business^® monthly report, are listed in the order of most growth to least growth. For the industries reporting contraction or decreases, those are listed in the order of the highest level of contraction/decrease to the least level of contraction/decrease.

ISM ROB Content
The Institute for Supply Management^® (“ISM”) Report On Business^® (Manufacturing, Services and Hospital reports) (“ISM ROB”) contains information, text, files, images, video, sounds, musical works, works of authorship, applications, and any other materials or content (collectively, “Content”) of ISM (“ISM ROB Content”). ISM ROB Content is protected by copyright, trademark, trade secret, and other laws, and as between you and ISM, ISM owns and retains all rights in the ISM ROB Content. ISM hereby grants you a limited, revocable, non-sublicensable license to access and display on your individual device the ISM ROB Content (excluding any software code) solely for your personal, non-commercial use. The ISM ROB Content shall also contain Content of users and other ISM licensors. Except as provided herein or as explicitly allowed in writing by ISM, you shall not copy, download, stream, capture, reproduce, duplicate, archive, upload, modify, translate, publish, broadcast, transmit, retransmit, distribute, perform, display, sell, or otherwise use any ISM ROB Content.

Except as explicitly and expressly permitted by ISM, you are strictly prohibited from creating works or materials (including, but not limited to: tables, charts, data streams, time-series variables, fonts, icons, link buttons, wallpaper, desktop themes, online postcards, montages, mashups and similar videos, greeting cards, and unlicensed merchandise) that derive from or are based on the ISM ROB Content. This prohibition applies regardless of whether the derivative works or materials are sold, bartered, or given away. You shall not either directly or through the use of any device, software, internet site, web-based service, or other means remove, alter, bypass, avoid, interfere with, or circumvent any copyright, trademark, or other proprietary notices marked on the Content or any digital rights management mechanism, device, or other content protection or access control measure associated with the Content including geo-filtering mechanisms. Without prior written authorization from ISM, you shall not build a business utilizing the Content, whether or not for profit.

You shall not create, recreate, distribute, incorporate in other work, or advertise an index of any portion of the Content unless you receive prior written authorization from ISM. Requests for permission to reproduce or distribute ISM ROB Content can be made by contacting in writing at: ISM Research, Institute for Supply Management, 309 W. Elliot Road, Suite 113, Tempe, AZ 85284-1556, or by emailing kcahill@ismworld.org; subject: Content Request.

ISM shall not have any liability, duty, or obligation for or relating to the ISM ROB Content or other information contained herein, any errors, inaccuracies, omissions or delays in providing any ISM ROB Content, or for any actions taken in reliance thereon. In no event shall ISM be liable for any special, incidental, or consequential damages, arising out of the use of the ISM ROB. Report On Business^®, Manufacturing PMI^®, Services PMI^®, and Hospital PMI^® are registered trademarks of Institute for Supply Management^®. Institute for Supply Management^® and ISM^® are registered trademarks of Institute for Supply Management, Inc.

About Institute for Supply Management^®
Institute for Supply Management^® (ISM^®) is the first and leading not-for-profit professional supply management organization worldwide. Its community of more than 50,000 in more than 100 countries manage about US$1 trillion in corporate and government supply chain procurement annually. Founded in 1915 by practitioners, ISM is committed to advancing the practice of supply management to drive value and competitive advantage for its members, contributing to a prosperous and sustainable world. ISM empowers and leads the profession through the ISM^® Report On Business^®, its highly-regarded certification and training programs, corporate services, events, and assessments. The ISM^® Report On Business^®, Manufacturing, Services, and Hospital, are three of the most reliable economic indicators available, providing guidance to supply management professionals, economists, analysts, and government and business leaders. For more information, please visit: www.ismworld.org.

The full text version of the Services ISM^® Report On Business^® is posted on ISM^®‘s website at www.ismrob.org on the third business day* of every month after 10:00 a.m. ET. The one exception is in January, the report is released on the fourth business day of the month.

The next Services ISM^® Report On Business^® featuring November 2024 data will be released at 10:00 a.m. ET on Wednesday, December 4, 2024.

*Unless the New York Stock Exchange is closed.

View original content to download multimedia:https://www.prnewswire.com/news-releases/services-pmi-at-56-october-2024-services-ism-report-on-business-302295651.html

SOURCE Institute for Supply Management