Service Sector Still Healthy

- ISM Non-Manufacturing for October rose to 55.8 versus estimates of 54.0 and a reading of 54.8 in September.

BOTTOM LINE: Service industries in the US unexpectedly grew at a faster pace in October, signaling the slump in housing has yet to filter to other parts of the economy, Bloomberg said. The New Orders component of the index rose to 55.7 from 53.4. The Export Orders component jumped to 56 from 50. The Inventories component fell to 49.5 from 50. The Prices Paid component fell to 63.5 from 66.1. It is a large positive that this gauge of the service sector, which accounts for around 90% of the economy, remains healthy. I continue to see few signs of the imminent recession that so many have predicted. I still expect US growth to rise around 2-2.5% over the intermediate-term as strong exports, decelerating inflation readings and inventory rebuilding more than offset the drag from housing.