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The Institute for Supply Management (ISM) reported that the October US services Purchasing Managers’ Index (PMI) fell to 54.5, down from September’s 54.9. The reading remained above the 50 threshold, indicating that services activity continued to expand, albeit at a slower pace than the previous month.
Prices Index Hits 2023 High
While the monthly prices index eased to 73 from 74, the 12-month average prices index rose to 69.2. This level is the highest recorded since April 2023. The divergence between the monthly and rolling average figures suggests that while the most recent monthly pressure has retreated, longer-term cost pressures remain persistent.
ISM’s diffusion indexes measure the direction and breadth of reported changes rather than the magnitude of price movements. A prices reading of 73 summarizes survey responses regarding the direction of change, whereas an inflation rate measures the size of price changes in percentage terms. The rolling average captures the sustained nature of this pressure over a longer window.
Other components of the report showed mixed signals. Business activity eased to 53.8, and new orders declined to 55.9. In contrast, the employment index rose to 51.4, indicating that hiring strengthened even as demand measures softened. ISM stated that tariffs and fuel costs were the most frequently cited supply-chain issues. Some respondents noted they had not yet passed these higher costs through to customers, leaving the eventual impact on consumer inflation uncertain.
Fed Policy and Crypto Exposure
The Federal Reserve held its target range at 3.75%-4% on Oct. 28, a decision made before the release of the October services data. The central bank’s statement described inflation as elevated and indicated that additional information would help determine the appropriate policy stance. The potential benefit of softer economic activity for risk assets runs through easier rate expectations and increased investor willingness to take risk. However, the persistent cost pressure seen in the 12-month prices index complicates the path toward rate relief.
An IMF working paper published in August 2023 found that US monetary tightening reduced a common crypto-price factor, which refers to shared movements across crypto prices. The paper identified this reduction as occurring through investors’ willingness to take risk, a channel similar to that operating in equities. This historical finding provides context for the plausible exposure of Bitcoin to monetary policy shifts, though any specific reaction to the current survey requires separate market evidence.
The next scheduled US data checkpoint is the October employment report, due Nov. 6. As of Nov. 5, the results of this report remain ahead. The data could alter the balance between growth and inflation concerns facing policymakers, influencing whether incoming data leads to easier rate expectations and lower yields.
Frequently Asked Questions
What was the October US services PMI reading?
The October US services PMI was 54.5, down from September’s 54.9. The reading remained above 50, indicating that services activity was still expanding.
When is the next US economic data release?
The next scheduled US checkpoint is the October employment report, which is due on Nov. 6.
