The S&P Global US Composite Purchasing Managers' Index final reading came in at 54.6 in October compared to 53.9 in September, and 54.6 in August, signaling a pick up in business activity growth at the second fastest pace so far in 2025 although employment saw only a modest uptick and sentiment regarding future conditions fell to a six-month low.

The US Services PMI Business Activity Index recorded 54.8 in October, up from 54.2 in September, but below expectations of 55.2 in the Econoday survey of forecasters.

Prices data showed the slowest increases in costs and selling prices since April, the report said.

[I]nput costs rose to the slowest degree in six months, which helped to explain a similar slowdown in the rate of selling price inflation (also the weakest since April), it added. Panelists reported that competitive pressures had limited the degree to which higher costs could be passed onto clients.

Tariffs also continue to fuel higher input costs compared to September.

On the employment front, job growth was modest as employers chose not to replace job leavers. This partly stemmed from cost considerations, with service providers noting that labor related expenses had been a source of increased overall operating expenses during October, S&P said.

No revision expected from the flash at 54.8 for composite and 55.2 for services.

US Services Purchasing Managers' Index (PMI) is based on monthly questionnaire surveys collected from over 400 U.S. companies which provide a leading indication of what is happening in the private sector services economy. It is seasonally adjusted and is calculated from seven components, including New Business, Employment and Business Expectations.

Investors need to keep their fingers on the pulse of the economy because it indicates how various types of investments will perform. The Markit Services PMI provides advance insight into the services sector, which gives investors a better understanding of business conditions and valuable information about the economic backdrop of various markets. The stock market likes to see healthy economic growth which generally translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly and causing potential inflationary pressures. The PMI data are also used by many Central Banks to help make interest rate decisions.

The IHS Markit Services Flash data give a detailed look at the services sector, the pace of growth and the direction of this sector. Since the service sector accounts for more than three-quarters of U.S. GDP, this report has a significant influence on the markets. In addition, its sub-indexes provide a picture of new business, employment, business expectations and prices.