U.S. Services Sector Hits Eight-Month High Despite Tariff Uncertainty

The U.S. services sector surged to an eight-month high in October, driven by robust new orders despite economic uncertainty caused by tariffs. The Institute for Supply Management's survey showcased a mixed business outlook amid the longest federal government shutdown in history, affecting official data release.

Economists emphasize a disconnect between economic growth and job expansion as the services PMI climbs to 52.4, suggesting a steady economy despite weak employment signals. The report highlights that while some industries report growth, sectors like finance and insurance are contracting, with trade tensions fueling disruptions.

With orders rising, export setbacks mirror the manufacturing sector's struggles. Despite a hesitant labor market, the Federal Reserve maintains cautious interest rate policies. The ongoing federal shutdown complicates data availability, affecting employment reports and consumer inflation figures.