ISM services signal faster growth

Despite a very disappointing employment report out this morning, the ISM Non-Manufacturing Index, which looks at activity in the broad-based service sector, increased for the third-consecutive month, rising from 54.3 in October to 55.0 in November, the best reading in six months.  A level of 50 suggests activity is neither expanding nor contracting.

Additionally, despite the weak gain in payrolls, the employment subcomponent, rose 1.8 points to 52.7, the highest reading since October 2007.



Much of the data has been suggesting that economic activity is accelerating following a lull over the summer, and the latest look at the service sector, which accounts for most economic activity, indicates the positive trend remains intact.

As the chart below reveals, employment and economic activity are closely correlated.



Growth in employment will eventually come about, but the lag has been frustrating.