Manufacturing may be rebounding at a solid pace, but today’s report on the service sector suggests non-manufacturing industries have only begun to stabilize.
The ISM Non-Manufacturing Index fell from 50.6 in September to 50.3 in October, shy of the consensus estimate of 51.6 provided by Bloomberg. A reading of 50 is neither expansionary nor shows the sector is contracting. And at 50.6, the service sector, for all practical proposes, has just stopped shrinking.
On the positive side, the trend over the past 12 months has been slowly to the upside. Unfortunately, the improvement has not made a dent in the jobless rate, and the employment component of the index remains weak, falling 3.2 points to 41.1.
ADP’s employment report, which came out this morning, showed that the private sector shed another 203,000 jobs last month. Friday’s nonfarm payroll report will provide greater clarity on how the labor market performed last month.
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