ISM services

The ISM services index was a touch below expectations at 50.6 vs forecasts of 51.5 and it’s down from 50.9 in Sept. Business Activity did rise a hair to 55.2, the highest since Oct ’07. Unlike the rise in the employment component in the ISM manufacturing report, services employment fell 3.2 pts to 41.1, the lowest since May and combine this with the ADP report and there is little reason to expect big upside in Friday’s payroll # with services making up more than 80% of the labor force. New Orders were a positive as they rose 1.4 pts, the highest since Oct ’07 and Backlogs rose 2 pts to the most since Nov ’06, both likely boosting the market. Export Orders were also a bright spot as they rose back above to 50 to 53.5. Prices Paid rose more than 4 pts to 53. Half of the industries surveyed reported growth and ISM sums up the # with “respondents’ comments remain mixed and are mostly cautious about business conditions and the overall economy.”

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