US services PMI hits eight-month high, but uncertainty remains

(Sharecast News) - Service-sector activity in the United States grew at its fastest pace in eight months in October, according to the Institute for Supply Management, though businesses still showed caution in their hiring decisions while the government shutdown weighed on confidence. The ISM services purchasing managers' index jumped to 52.4 last month from 50 in September, the ISM said on Wednesday.

That marked the quickest rate of expansion - indicated by any figure about the neutral 50-point mark - since February and was well ahead of the 50.8 consensus estimate.

The business activity sub-index returned to growth in October, jumping 4.4 points to 54.3, while the new orders measure surged to a 12-month high of 56.2, up 5.8 points over the month.

On the downside, the employment index fell for the fifth straight month - albeit showing a 1 point improvement to 48.2 -showing a "lack of confidence in the continued strength of the economy", according to ISM chair Steve Miller.

Meanwhile, the prices index rose 0.6 to 70, its first time at or above that threshold in three years, as survey respondents "continued to mention the impact of tariffs on prices paid", Miller said.

The ISM chair added: "There was no indication of widespread layoffs or reductions in force, but the federal government shutdown was mentioned several times as impacting business activity and generating concerns for future layoffs."