There was a fast-paced expansion in the US service industry this past October. With growth in restaurants, more job gains, and low inflation, the economy seems to be making a good recovery. A group from the Institute for Supply Management in Tempe, Arizona stated that the non-manufacturing index went up to 59.1 from 56.9.It is said that anything above 50 indicates expansion. These are positive signs that the economy will be able to endure potential weaknesses in manufacturing.
With service rising, this provides the Federal Reserve with justification to raise the interest rates in December. Ryan Sweet, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania stated, “Given that the consumer continues to do the heavy lifting for the economy, that’s going to benefit services.”
Although the government had been shut down for half of October, data shows companies are looking past this temporary setback.“Some of the areas with closer ties to Washington were probably negatively impacted, but the rest of the economy seems to have done okay,” stated Mark Vitner, a senior economist in Charlotte, North Carolina at Wells Fargo & Co., the biggest US home lender.
In a Bloomberg survey of 74 economists, the median forecasted non-manufacturing index was 56.5.The range was from 54.5 to 58.1.This figure in October exceeded the measure’s average of 57.3 that is to go from this year through September.
The Institute for Supply Management measured the service industry to be the second highest since August 2005.The Institute for Supply Management surveys senior executives of industries from retailing, utilities, finance, and healthcare that are in charge of ordering supplies. This makes up about 90 percent of the economy. The senior executives making the purchases are starting to gain confidence in the expansion.
The employment gauge in non-manufacturing industries went up to 56.2 from 52.7, and the new orders decreased to 56.8 from 59.6.The business activity index is parallel to the Institute for Supply Management’s production measurement and demonstrated that prices paid increased to 49.1. This showed that cost is falling at a much slower rate.
There was a sure sign shown in consumer demand when the sale of motor vehicles rose in October. This was the strongest back-to-back performance since 2000.With the combination of low gas prices, available credit, and job growth, people are more willing to replace their older vehicle models for newer models.
Some service industries in the world are still trying to bring up their economy. However, the United Kingdom unexpectedly grew in October at its fastest rate in 16 years. This showed signs of advancement beyond the rest of Europe. There is a measurement of activity that showed a rise to 62.5 from a previous 60.3 in September. A report that came to the attention of the European Commission predicted that the United Kingdom will grow 2.2 percent next year. This puts them at twice the pace than the rest of Europe and separated them from Germany and France in this regard.