ISM riddle for the Fed: Service activity soars as factories slump

Wells Fargo Research Team Wells Fargo

Summary

The service sector is expanding at as fast a pace as it has since early 2022 as the gap between service sector activity and manufacturing activity widens to a degree only seen once before in records dating back to the 1990s.

You could drive a truck through this gap

Regardless of the outcome of today's election, the next President will inherit an economy where service-sector activity remains firmly in expansion even as manufacturing struggles. Coming on the heels of last week's manufacturing ISM, which showed yet another month in contraction, today's ISM services report showed an increase to 56.0, or the broadest pace of service sector expansion since the summer of 2022. The gap between the two bellwethers is the second largest on record and has not been so large in more than 22 years.

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Wells Fargo Research Team

Wells Fargo

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