The numbers: The service side of the U.S. economy rebounded in October after growth tapered off in the prior month to a three-year low, aided by reduced trade tensions between the U.S. and China.
The Institute for Supply Management’s said its non-manufacturing index rose to 54.7% last month from a 52.6% reading in September that was the weakest in three years.
Economists polled by Marketwatch had expected the index to rise to 53.8%. Numbers over 50% indicates businesses are growing.
Service-oriented companies haven’t been hurt as much by the China trade dispute as American manufacturers, but the spillover effects have resulted in slower growth. The services index is down 6 points from its cycle peak.
Even better, the employment gauge rose 3.3 points to 53.7% from a five-year low in September. Some executives complained of shortages of skilled labor with the unemployment rate at a 50-year bottom.
Altogether, 13 of the 17 industries tracked by ISM said their businesses were expanding, the same as in the prior month.
The ISM index is compiled from a survey of executives who order raw materials and other supplies for their companies. The gauge tends to rise or fall in tandem with the health of the economy.
Big picture: Service companies such as tech firms, financial institutions, health-care providers and restaurants have grown faster than manufacturers, insulating the U.S. economy from a global slowdown triggered in part by the U.S.-China trade war. Consumers continue to spend at levels sufficient to keep the economy out of recession.
Market reaction: The Dow Jones Industrial Average
the S&P 500
climbed in Tuesday trades, with the S&P touching a record high. The 10-year Treasury yield
rose to 1.82%, extending a recent rally.