ISM index falls to record low 44.4% in Oct. on broad-based declines
WASHINGTON (MarketWatch) -- More nonmanufacturing companies in the United States, a key source of economic strength over the past two decades, buckled in October under the weight of the economic woes facing consumers.
The ISM nonmanufacturing index fell to a record low of 44.4% in October from 50.2% in September, according to a survey of companies released Wednesday by the Institute for Supply Management.
Readings below 50% in the diffusion index indicate more firms are contracting than expanding. In October, only three out of 18 industries were growing.
Comments from purchasing managers were mostly negative about business conditions in October, ISM said.
"Uncertainty is having the usual effect on business. Our response is traditional - stop all discretionary spending," one manager told the ISM.
On Monday, the group reported that the ISM manufacturing index also fell in October to the lowest level in 26 years. See full story.
The drop was larger than expected. Economists surveyed by MarketWatch expected the ISM index to fall to 47.5%. See Economic Calendar.
The new-orders index fell in October to 44.0% from 50.8% in September.
The prices-paid index fell to 53.4% in October from 70.0% in September, the largest one-month drop on record.
The employment index fell to 41.5% from 44.2% in September, a signal of a weak unemployment report to be released on Friday.
Another signal of weak labor markets was released Wednesday. The ADP employment reported fell 157,000 in October, suggesting that nonfarm payrolls declined by about 131,000 once about 26,000 government jobs are added in.
