Markit Service Sector Continues to Show Slowing Growth, ISM Non-Manufacturing Sample Shows Solid Conditons

Markit's sample of US service providers reports a 5th straight month of slowing growth from June's recovery peak, at a composite index of 56.2 vs 56.3 at mid-month and a final 57.1 in October. Readings on new business and output have now moderated for 7 straight months. A positive is a 5-month high in hiring and a 5-month high in the business outlook. Of note is continued moderation in inflation pressures with the increase in input costs the lowest since April last year and the increase in prices charged the lowest since July this year.

Despite slowing in the report, levels are still very healthy and sustainable. Coming up at 10:00 a.m. ET this morning is the non-manufacturing report from the ISM which, aside from services, also covers the construction and mining sectors.

...meanwhile...

ISM's non-manufacturing sample reports very solid conditions, at a composite 59.3 in November vs 57.1 in October. Aside from August's 59.6, November is a recovery high going back more than 9 years. New orders are very strong, up 2.3 points in the month to 61.4 with backlog orders up 4.0 points to 55.5 in a reading last matched in April 2011. Strength in orders is keeping up business activity which rose 4.4 points to a very strong 64.4. Employment remains solid but did slow 2.9 points from October's near record of 59.6. Deliveries slowed noticeably, which is another sign of strength, while inventories rose. Pressures on input prices rose a bit to 54.4 which, however, is still benign for this reading. A look at industries shows the retail sector at top, which of course is very good news going into the holidays, and construction right behind which is also very good news. This report points to solid year-end acceleration for the economy.

Recent History Of This Indicator:
The composite index from the ISM non-manufacturing survey is scheduled for this week. ISM's non-manufacturing sample reports slowing but still very solid growth in October, at a composite reading of 57.1 vs 58.6 in September. A big plus in the report was a solid 1.1 point gain in employment to 59.6. This is the third strongest reading for employment in the 17 year history of the report which has exceeded 60 only once, in August 2005. But other readings slowed with new orders down 1.9 points to 59.1, for the least robust reading since April, and business activity down 2.9 points to 60.0.