Some of the recent data that has been out on the economy is underscoring how delicate the economic recovery has been so far, but the latest look at the service sector suggests that a broad swath of the economy is finally beginning to expand.
The ISM Non-Manufacturing Index rose from 48.4 in August to 50.9 in September, the first time it has been above 50 since August 2008 and the best reading in 16 months. A reading above 50 is expansionary.
Even better, the the Non-Manufacturing Business Activity Index increased 3.8 percentage points to 55.1, indicating that economic activity is accelerating. Unfortunately, job losses continued to mount as the employment subcomponent barely edged up to 44.3, which isn’t a big surprise given the large number of layoffs that occurred in last month’s nonfarm payroll number.
Nonetheless, with signs that the recovery is broadening, job losses should slowly improve in the coming months as it appears that the expansion is starting to move beyond housing and manufacturing.
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