Implications: More plow horse growth reported today in the service sector as the ISM services index grew for the 34th consecutive month coming in at 54.2. Although this was slightly lower than the consensus expected in October, the index looks to be picking up some steam. Besides last month, this is the best reading on the ISM non-manufacturing index since March. The sub-index for business activity – which has a stronger correlation with economic growth than the overall index –slipped to 55.4, but still remains at a healthy level. The real bright spot in today's report was the employment index which rose to 54.9, the highest level since March and is consistent with the modest growth we saw in payrolls in October. On the inflation front, the prices paid index declined to 65.6 but remains elevated, and given the loose stance of monetary policy, should continue to move higher over the coming years.
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