Why is this number so important? The reason is that the service sector accounts for 80% of US economic activity. A reading below 50 indicates shrinkage in 80% of our economic activity.That is not good news. Dan Cook of IG Markets said: "Seeing the number below 50 there, that to me is pretty harsh."
The business activity index fell to 49.6 in November, down from 55.2 in October. This too, is a big drop.
The prices paid index rose to 57.8 from 53 in October. New orders index fell to 55.1 from 55.6 in October.
The employment index rose to 41.6 in November from 41.1 in October. However, it stood at 44.3 in September.
Overall, this is not good news. Economic activity is not picking up. Instead it is shrinking. And since the service sector accounts for such a big chunk of our economy, it will drag the base of business activity down. We must ask ourselves, is our economy getting better? While some numbers indicate a slight improvement, these data certainly point downward.
Do you believe that the service sector will improve next year?