Implications: Unlike the manufacturing sector, which showed strong acceleration in November, the service sector continued to grow in November, but at a slightly slower pace. The ISM services report came in at a healthy 53.9 in November, slightly below consensus expectations but showing expansion for a 47th consecutive month. The business activity index – which has a stronger correlation with economic growth than the overall index – declined to 55.5. The employment index also declined in November, slowing to 52.5 but remaining above 50.0 for a 16th consecutive month. The new orders index pulled back slightly in November, but even with the decline it remains at a strong 56.4. On the inflation front, the prices paid index declined to 52.2 in November from 56.1 in October. Still no sign of inflation, but given loose monetary policy, we expect this measure to move upward over the coming year. The Federal Reserve has been far too easy for far too long. Today's report, along with other data we have received this week, show the economy is doing just fine and will continue to plow ahead through the end of 2013.
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