Implications: A very solid report on the service sector today as the ISM non-manufacturing index showed expansion for the 36th consecutive month, easily beating consensus expectations, and coming in at 56.1, the highest level since February. The underlying details of the report were pretty good, too. The biggest surprise from today's report was that the employment sub-index surged in December coming in at 56.3, the best reading since March and a good sign for the economy moving forward. The sub-index for business activity – which has a stronger correlation with economic growth than the overall index – fell slightly to 60.3, but remains at a very healthy level. New orders saw an increase to 59.3, the best levels since February. On the inflation front, the prices paid index declined to 56.6, but remains elevated. Given the loose stance of monetary policy, inflation should continue to move higher over the coming years. Today's report, along with other data we have received this week, show the economy is doing just fine and will continue to plow along through 2013.
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