Strength Continues To Show In Service Sector

Strength in the service sector, given weakness in global demand, is more vital than ever to the nation's economy and Markit's U.S. sample is pointing to strength with the composite index up more than 2 points to a 56.5 level that well exceeds Econoday's high estimate. The sample's output is the strongest since April and is tied directly to domestic demand. New orders are the strongest since July with gains in both consumer and business categories. Strength is confirmed by a solid increase in employment though a fourth straight decline for backlog orders is containing demand for labor. One negative is caution on the 12-month outlook, the result of the uncertain global environment. Price data remain mute though prices charged are up for a second month. This report is a positive and, together with this morning's durable goods orders on the factory side, point to economic momentum heading into year end and the holidays.

Recent History Of This Indicator:
The service sector is the bread and butter of the U.S. economy and continued strength for the services PMI is expected, at a consensus 55.0 for the November flash for a 6 tenths increase from October. Though gains for November are expected, details in the October report were soft with new business slowing and backlog orders continuing to contract.