U.S. Services PMI Rises to 52.4% in October — Growth Returns, But Job Weakness Clouds Outlook
A Return to Expansion for the U.S. Services Sector
After hovering near the edge of contraction last month, the U.S. services industry bounced back in October 2025, with the ISM® Services PMI® climbing to 52.4% — a solid return to growth.
According to the Institute for Supply Management® (ISM), this marks the eighth time in 2025 that the services sector has expanded. The improvement was driven mainly by stronger business activity (54.3%) and a surge in new orders (56.2%), signaling that consumer and business demand remains resilient despite broader economic uncertainty.
However, the Employment Index slipped again — at 48.2%, it remains in contraction for the fifth straight month, hinting that service companies are still hesitant to hire amid cost pressures and uncertain demand.
Key Numbers at a Glance — October ISM® Services PMI®
Services PMI®: 52.4% — Sector growth resumed
Business Activity: 54.3% — Strong rebound
New Orders: 56.2% — Sharp demand pickup
Employment: 48.2% — Hiring remains weak
Supplier Deliveries: 50.8% — Slight slowdown, steady demand
Prices: 70.0% — Inflation pressures persist
According to Steve Miller, Chair of ISM’s Services Business Survey Committee, the rebound in business activity and new orders “are positive signs,” but the ongoing employment weakness reflects “a lack of confidence in the continued strength of the economy.”
Tariffs, Shutdowns, and Prices: The Hidden Forces at Play
Respondents in ISM’s survey cited tariffs and trade tensions as a key driver of rising costs. The Prices Index jumped to 70%, its highest level since 2022 — a clear sign that inflationary pressures remain sticky, especially in areas like health care, utilities, and logistics.
Additionally, some executives mentioned that the recent U.S. federal government shutdown disrupted business operations and created concerns about future layoffs, particularly in public services and construction.
Still, despite these challenges, 11 industries reported growth in October — including Accommodation & Food Services, Retail Trade, and Real Estate — all of which point to stable consumer demand heading into the holiday season.
What This Means for Forex Traders
For Forex traders, especially those watching pairs like USD/CAD, EUR/USD, and USD/JPY, the Services PMI is a vital clue about U.S. economic momentum.
Here’s how to interpret it:
PMI above 50% = Economic Expansion (Bullish USD)
When the services sector grows, it supports higher output, stronger spending, and potentially delayed rate cuts from the Federal Reserve.PMI below 50% = Contraction (Bearish USD)
A drop below 50% would signal shrinking activity, potentially prompting the Fed to consider more accommodative monetary policy — weakening the dollar.
With October’s PMI at 52.4%, the U.S. Dollar could gain modest support, but the continued weakness in employment and persistent inflationary costs suggest the Fed may tread cautiously in upcoming meetings. Traders might see short-term USD stability rather than a strong rally.
How to Read This for Forex Trading
For Forex Trading beginners, the Services PMI acts like a “pulse check” on America’s economic health.
A rising PMI often signals growing consumer confidence — boosting demand for the USD.
A falling PMI, especially when paired with weak jobs data, can weaken the dollar and benefit other currencies like the EUR or JPY.
In this case, with both new orders and activity rising, traders can expect moderate optimism, but with employment still contracting, the market may remain range-bound until clearer data arrives from Nonfarm Payrolls and inflation reports.
Why It Matters for Filipino Traders
For Filipino Forex traders, understanding PMI reports helps you predict U.S. Dollar movements — which affect global exchange rates, including the Philippine Peso (PHP).
When the U.S. services sector expands, it can:
Strengthen the USD, raising the USD/PHP rate (bad for importers but good for exporters and OFWs).
Signal stable global demand — helping Philippine industries tied to BPOs, tourism, and logistics.
On the other hand, weak PMI or slowing jobs data may weaken the USD, leading to short-term trading opportunities in currency pairs involving the dollar.
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