An in-depth analysis of the ISM services index
In the month of October 2023, the ISM services index in the United States registered a significant increase, rising to 56 points from 54.9 in September. This increase represents the fastest growth in the last two years, suggesting a strengthening of the tertiary sector, crucial for the American economy. The ISM index, which measures economic activity in the service sector, is a key indicator for understanding the country’s economic health.
New orders and growing employment
Despite the drop of 2.0 points in the indicator relating to new orders, which stands at 57.4 points, the figure is still high. This suggests that, although there has been some downturn, demand in the services sector remains robust. In addition, production fell by 2.7 points, to 57.2, while employment jumped by 5 points, reaching a 14-month high of 53. These data indicate a recovery in employment, which is essential to support economic growth.
Inflation and future prospects
The price paid index, which acts as a measure of inflation, showed a drop of 1.3 points, falling to 58.1. This return to relatively low pre-pandemic levels is a positive sign, as it suggests that inflation could stabilize, allowing greater flexibility for monetary policies. The report therefore highlights an excellent state of health in the tertiary sector, which could further benefit from the expected reduction in interest rates by the Federal Reserve. Such measures could further stimulate economic growth, making the service sector even more dynamic.
Impact of elections and the stock market
The political and economic context is also influenced by the upcoming US presidential elections. In this climate of uncertainty, the stock market showed a cautious start, with the Ftse Mib remaining almost unchanged, recording -0.1% at 34,500 points. However, companies like Palantir Technologies have increased their annual revenue forecasts, thanks to the adoption of generative artificial intelligence technologies. This shows that, despite political uncertainties, there are opportunities for growth in the technology and services sector
.