The Institute for Supply Management (ISM) will release the October Services Purchasing Managers’ Index (PMI) on Wednesday, offering a key update on business conditions in the United States’ largest economic sector. The gauge, closely watched as a leading indicator of overall economic momentum, is expected to show a mild uptick in activity.
This release comes at a time when several major economic reports have been postponed or canceled due to the ongoing US government shutdown. As a result, the ISM Services PMI may carry greater-than-usual influence on financial markets and the near-term direction of the US Dollar (USD).
Market expectations
Forecasts suggest a modest expansion, with the headline index seen rising to 50.7 in October from 50.0 in September. Analysts at TD Securities anticipate both ISM surveys to firm in October after mixed readings over the summer. They noted that the services PMI could recover part of its recent decline, adding that investors will closely monitor business sentiment and employment data within the report.
In September, the Employment Index registered 47.2, marking its fourth straight month below the 50 threshold — a sign of continued softness in service-sector hiring. Federal Reserve Chair Jerome Powell acknowledged the slowdown in job creation following the Fed’s October meeting but said officials do not see labor-market conditions deteriorating sharply. He also emphasized that a December rate cut remains uncertain.
Inflation pressures remain elevated
The survey’s Prices Paid Index, a key inflation measure, has held above 69 for three consecutive months, indicating persistent cost pressures across service industries.
Rate outlook
According to the CME FedWatch Tool, markets currently assign roughly a 67% chance of a 25-basis-point rate cut at the Fed’s December policy meeting — highlighting continued investor expectations for easing despite mixed economic signals.
