October 2015 ISM Services Index Improves

The ISM non-manufacturing (aka ISM Services) index continues its growth cycle, and improved from 56.9 to 59.1 (above 50 signals expansion). Important internals likewise improved and remain in expansion. Market PMI Services Index was released this morning, also is in expansion, and declined..

This was above expectations of 55.0 to 57.5 (consensus 56.7).

For comparison, the Market PMI Services Index was released this morning also – and it weakened marginally. Here is the analysis from Bloomberg:

Released On 11/4/2015 9:45:00 AM For Oct, 2015

	Prior	Consensus	Consensus Range	Actual
Level	55.1	54.8	54.4 to 55.3	54.8

Highlights
Growth in Markit’s U.S. service sector sample is slowing slightly, coming in at a final 54.8 vs the flash reading of 54.4 and vs September’s final reading of 55.1. Details are soft with growth in new business at its slowest pace since January and with backlogs down for a third straight month.

Weakness in orders in turn is pulling down 12-month expectations which are near July’s three-year low. Employment is described as modest with hiring at its slowest pace since February. Price readings are mute.

Despite the soft details, the service sector is still humming along solidly and helping to offset weakness in manufacturing. ISM’s non-manufacturing report will be posted this morning at 10:00 a.m. ET.

There are two sub-indexes in the NMI which have good correlations to the economy – the Business Activity Index and the New Orders Index – both have good track records in spotting an incipient recession – both remaining in territories associated with expansion.

This index and its associated sub-indices are fairly volatile – and onande needs to step back from the data and view this index over longer periods than a single month.