The non-manufacturing index (NMI), which gauges the performance of the services sector, registered 54.7 percent in October, which is 2.1 percentage points above the September reading, according to the latest Non-Manufacturing ISM Report on Business. A reading above 50 percent indicates that the non-manufacturing sector economy is generally expanding.
The September NMI of 52.6 percent is the lowest reading since August 2016, when the NMI hit 51.8 percent, the ISM said.
"The non-manufacturing sector had an uptick in growth after reflecting a pullback in September," said Anthony Nieves, chair of ISM's non-manufacturing business survey committee. "The respondents continue to be concerned about tariffs, labor resources and the geopolitical climate."
"The past relationship between the NMI and the overall economy indicates that the NMI for October (54.7 percent) corresponds to a 2.1-percent increase in real gross domestic product on an annualized basis," Nieves said.
According to data released by the ISM last week, the purchasing managers' index, which gauges the performance of the manufacturing sector, stood at 48.3 percent in October, indicating contraction of U.S. manufacturing activities for the third month in a row.