On October 4, Caixin learned that in early trading on Thursday (October 3), the U.S. stock market unexpectedly strengthened, according to the Institute for Supply Management (ISM), indicating that the U.S. economic foundation at the end of the third quarter remains relatively stable.

Specific data shows that the ISM Non-Manufacturing Purchasing Managers' Index (PMI) recorded 54.9 in September, the highest level since February 2023, up 3.4 points from the August reading, which the market originally expected to only increase from 51.5 to 51.7.

15 minutes before the ISM report was released, s&p global slightly adjusted the U.S. September Non-Manufacturing PMI from 55.4 to 55.2. Although it was lowered, this level is already near its highest level in nearly two and a half years.

PMI is compiled from monthly surveys of purchasing managers and is an "indicator" that measures the state of industry development and reflects future economic trends. The index is generally considered to be critical at the 50 level. If the index is above 50, it indicates that the sector is expanding; if it is below 50, it indicates that the sector is contracting.

BMO Capital Markets Senior Economist Sal Guatieri commented, "With robust consumer spending, large service industries continue to add pillars to expansion, which may lead the Federal Reserve to cut interest rates by a smaller margin in November, namely 25 basis points."

The ISM press release shows that in September, 12 service industry sectors reported expansion, 2 more than in August. Real estate, corporate management and support services, as well as lodging and food services led the growth, while 5 sectors contracted.

ISM Non-Manufacturing Business Survey Committee Chairman Steve Miller wrote, 'The PMI's strong growth is being confirmed by the survey group members, however, concerns about political uncertainty are more widespread than the previous month.'

Guatieri also mentioned that the strike by dockworkers is an uncertainty. At the beginning of this month, tens of thousands of members of the American International Longshoremen's Association went on strike, causing over half of the container shipments in the U.S. to stall, resulting in direct economic losses for related businesses and workers.

If the strike lasts for weeks, the U.S. economy will face various impacts such as reduced activity, shortages, and price increases. Miller stated that some respondents expressed concerns about port labor issues, 'While rate cuts are welcomed, labor costs and availability remain major concerns for most sectors.'

In the sub-index data, the employment index dropped from 50.2 to 48.1. Miller told the media that the decrease in the employment index reflects a 'reduced proportion of companies adding new employees,' rather than 'an increase in the number of job cuts.'

Before the market opened, the U.S. Department of Labor announced that the number of initial jobless claims last week was recorded at 0.225 million people, a slight increase from the previous week's 0.219 million people. Despite this year's slowdown in hiring activities and rise in unemployment rate, initial claims data remains relatively low.

Analysts believe that this is mainly because most American employers have retained existing employees instead of laying them off. Career consulting firm Challenger, Gray & Christmas stated that the number of announced layoffs by employers has remained relatively stable since the beginning of this year compared to the same period last year.

Challenger stated that the majority of layoffs come from the technology industry, which usually offers substantial severance packages, meaning that workers in these industries are less likely to seek unemployment insurance.

Editor/Lambor