WASHINGTON — Growth in the vast U.S. service sector rebounded in October after sinking to a three-year low in September causing concern for investors and economists.
The Institute for Supply Management, an association of purchasing managers, reported Tuesday that its service index grew to 54.7% last month, up from 52.6% in September. Any reading above 50 signals growth.
The service sector, which accounts for more than two-thirds of U.S. economic activity, has been expanding for 117 straight months, according to the survey-based ISM index.
Measures of sales, new orders and employment all rebounded from the previous month.
Although some companies surveyed for the index say they are still having difficulty finding workers due to a historically low 3.6 per cent unemployment rate, measures of employment grew a solid 3.3% in October.
Other respondents were upbeat about the upcoming holiday season as business activity and new orders both rose nearly 2%. Thirteen of 18 industries surveyed reported growth in business activity, while 10 out of 18 reported growth in new orders.
“We exceeded expectations for the month for the most part,” said Anthony Nieves, chair of the ISM’s non-manufacturing business survey committee.
Nieves noted that the fourth quarter is typically stronger in the services sector due to the holiday season, adding that respondents were optimistic beyond the fourth quarter.
“We had some good comments from panelists, they were confident about this quarter and going into 2020,” Nieves said.
October’s rebound comes after September’s lacklustre report spooked investors and economists. The Dow Jones Industrial Average fell more than 200 points immediately after the ISM released its report, though markets did bounce back.
The October report could ease near-term market anxiety about the trade standoff between the U.S. and China, which has squeezed American manufacturers. There were fears that that had begun to seep into the much-larger services sector.
U.S. manufacturing output dropped for the third straight month in October as trade tensions and a slowing global economy took a toll on American factories.
Matt Ott, The Associated Press