The ISM Services report was generally stronger than expected, with only new orders missing but that was versus a typically narrow survey and with levels still at highs since early 2023. The buoyant employment component is the standout this month considering the uncertainty surrounding Friday’s payrolls report. 

• ISM Services index: 56.0 (cons 53.8) after 54.9 – highest since Aug 2022 having built upon an at the time easily stronger than expected September reading.
• Employment: 53.0 (cons 48.0, 3 responses) after 48.1 – highest since Aug 2023 with the 4.9pt jump coming after a 3pt cumulative decline in Aug and Sept.
• Prices paid: 58.1 (cons 58.0, 5 responses) after 59.4 – pulling back 1.3pts after the 2.1pt increase in September left it at the highest since January. Context: averaged 58.3 in 1H24, 59.3 in 2023 and 57.5 in 2019 so not a huge needle mover today.
• New orders: 57.4 (cons 58.0, 3 responses) after 59.4, a small miss against a typically very small sample of estimates. It’s still a very healthy reading as the 2.0pt decline on the month holds much of September’s 6.4pt jump. These latest two months are the highest since Feb 2023.