 | ISM services report beats expectations, rising to 54.3 in October |
|
|
Implications: Today's ISM services report shows economic growth is accelerating into the end of the year. In particular, the business activity index, which has an even higher correlation with economic growth than the overall ISM services index, jumped sharply to 58.4 from 52.8, the largest single-month gain so far in the recovery. After dipping slightly this Summer, the service sector is rebounding strongly, with today's report coming in above the consensus expected increase. Meanwhile, the employment index increased again, tying the highest level since the recovery began. On the inflation front, the prices paid index spiked upward to 68.3. This is the highest the index has been since September 2008 and the collapse of Lehman Brothers. In other words, the Federal Reserve is paying too little attention to the future risk of higher inflation. In other news this morning, the ADP Employment index, a measure of private sector payrolls, increased 43,000 in October. This index typically underestimates private payroll growth in the official Labor Department report and is therefore consistent with our forecast of private payrolls increasing about 120,000 in October.
Click here to view the entire report.
|
|