US services sector activity picks up further in October, ISM says

The Institute for Supply Management's Purchasing Managers' Index for activity in services improved from a September reading of 54.9 to 56.0 (Consensus: 53.8).

New orders rose a tad less quickly, with the corresponding sub-index dipping from 59.4 to 57.4.

Price growth was little changed too. The sub-index for prices paid ebbed from 59.4 to just 58.1.

Another index linked to employment picked up from 48.1 to 53.0.

For both the headline and all subindices, the 50.0 point level marked the threshold between a contraction and an expansion.

"October’s survey leaves our weighted average ISM index pointing to quarterly GDP growth of around 2% annualised. This is still below the 2.8% figure recorded in the third quarter but suggests the index’s accuracy in gauging the strength of the economy may finally be improving," said Bradley Saunders, North America economist at Capital Economics.

"Either way, we doubt the data will do much to sway the decision of the Fed on Thursday, who will attribute more weight to the third-quarter GDP data and employment report for October released last week. Therefore we, along with everyone else, still expect a 25bp cut."

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