Services sector expands for fifth straight month
SILVER SPRING, Md. (AP) — The U.S. services sector, where most Americans work, registered its fifth consecutive month of expansion in October.
The Institute for Supply Management reported Wednesday that its index of services activity ticked down to a reading of 56.6 last month, from September’s reading of 57.8. Any reading above 50 signifies expansion in services industries such as restaurants, department stores and delivery companies.
The index registered sharp contractions in April and May as shutdowns aimed at containing the coronavirus closed many businesses and put millions of Americans out of work. But starting in June, the index began to rise again and is just below its February level of 57.3.
Business activity and new orders continued to expand in October, albeit at a slightly slower clip. The index measuring employment also grew more slowly. The gauge for prices continued to rise with a large number of commodities in short supply, including cleaning products and personal protective equipment.
Sixteen of the 18 service sector categories reported growth in October, with just arts, entertainment and recreation and public administration reporting contraction.
The services sector had been growing for 122 consecutive months before it fell into contraction territory in April and May as widespread shutdowns took hold.
Most respondents to the survey were positive, even as winter approaches as coronavirus cases, hospitalizations and deaths continue to climb.
“We continue to be cautiously optimistic that the rebound in business that began in July continues to sustain,” said one comment from retail trade industry.
Economists also saw positive signs in the report, but remained cautious about projecting too much into the future.
“The outlook is less certain now that virus cases are surging,” said Rubeela Farooqi, chief U.S. economist at High Frequency Trading. “Risks are to the downside from new restrictions and closures that will weigh on demand and activity going forward.”