What’s going on here?
The US services sector hit its highest point in over two years, with the ISM nonmanufacturing PMI rising to 56.0 from September’s 54.9. This robust performance unfolds as Kamala Harris and Donald Trump compete for voter attention in the lead-up to the presidential elections.
What does this mean?
The services sector is a heavyweight, constituting over two-thirds of the US economy, and its unexpected growth in October highlights a resilience that could shape economic discussions during the presidential race. As the sector flourishes, there’s speculation that the Fed might slice interest rates by 0.25 percentage points to sustain growth, expanding on strong data like a 2.8% GDP increase in the third quarter. Yet, even with a healthier services employment index at 53.0, challenges such as the Boeing strike and recent hurricanes have dented job growth, per Labor Department reports. As Harris and Trump vie for voter backing, these economic indicators might influence voter views amidst worries over inflation and living costs.
Why should I care?
For markets: Growth amid uncertainty.
The vigorous services sector boosts market optimism, but investors must remain watchful of unexpected issues like labor strikes and weather disruptions. The anticipated Fed rate cut aims to support this economic vitality, offering opportunities for market gains, although inflation concerns continue to influence investment strategies.
The bigger picture: Economy steers the political ship.
The strong performance of the services sector frames a critical narrative in the electoral context, with economic stability emerging as a key issue. With the Fed shaping policies to endorse growth, the relationship between economic health and voter sentiment is set to influence future policy paths, affecting both the domestic and global economic landscapes.
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Originally Posted November 4, 2024 – US Services Sector Hits New Heights Before Elections
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