As has become a trend in the last several days, another economic indicator covering the month of October came up short of expectations. The most recent example is the ISM Non-Manufacturing report. While economists were expecting a headline reading of 56.0 versus last month’s reading of 57.1, the actual reading came in at 54.8. Yes, the report was weaker than expected, but it comes after last month’s print which showed the largest m/m increase in the history of the survey. On a combined basis and accounting for each sector’s share of the overall economy, the October ISM came in at a level of 54.5 compared to last month’s reading of 56.4. Again, that decline also came on the heels of the largest one-month increase on record in September. Looking at the charts of both indices, current levels are right in the middle of their range of the last few years.
As far as the internals of the report are concerned, things were, for the most part, weak. While every category is in expansion mode (above 50), the only ones that showed a month/month increase were Inventories, Prices, and Import Orders. Compared to a year ago, breadth was similarly weak with just Prices and Export Orders showing a year/year increase. With the October employment report coming up tomorrow, it was especially noteworthy that the category that showed the largest m/m and y/y decline was Employment.