Favorable economic data pushed stocks near a 100-point gain Tuesday morning. One of the positive reports came from the Institute for Supply Management (ISM), which noted that its service-sector index increased to 53.2 during September. This reading easily outpaced August's reading of 51.5 and handily trumped the Street's estimate for a reading of 52.0.

This reading is good because any readings above 50 signal growth in the service sector. This sector is considered the area where the most jobs are created; ergo, growth in this sector suggests that there will be more hiring on the horizon. On a yearly basis, the index shows that service companies have expanded every month this year.

Export orders were on the rise in October in China, suggesting a strengthening recovery and an opportunity to cut back on stimulus spending. The manufacturing measure grew at its fastest rate in the past year and a half, according to the HSBC (NYSE: HBC) purchasing managers' index. It increased to a seasonally adjusted 55.4 from 55 in September.

If you're looking for a reason behind the gain, it's all in the flow of capital. In addition to the government's economic stimulus package, $1.27 trillion in new loans were written to help deliver the country from the global financial crisis.

On Friday June 5, the U.S. Labor Department will release the unemployment numbers for May. Here are some guesstimates from leading economists:

• The median of 59 estimates will show that unemployment is at 9.2%, the highest since 1983.
• The jobless rate may reach 10% by the end of the year.
• Estimates are that payrolls fell by 521,000 in May after declining by 539,000 in April.
• The median of 60 estimates showed the job losses peaked at 741,000 in January.
• The economy has lost 5.7 million jobs since December 2007.

In economics, as in broader statistical analysis, researchers caution against reading too much into any one data point.

The reasons are obvious enough: anomalies occur, preliminary statistics are often revised and trends take months, if not quarters, to form.

With the above as a backdrop, January's Institute for Supply Management index was a mild positive, nudging higher to 35.6 from 32.9 in December.

An ISM reading below 50 indicates a contraction; above 50, an expansion. The ISM had fallen for the past year, and has been below the 50 demarcation level since February 2008. Economists surveyed by Bloomberg News had expected the index to drop to 32.6 in January.

The record contraction in the U.S. manufacturing sector continues. Production at factories in the United States contracted in October at the fastest pace in 26 years, as companies reduced orders and the credit crisis began to ripple-through the manufacturing process.

Institute for Supply Management's Manufacturing Index for October fell to 38.9 -- its lowest level since September 1932 -- from 43.5 in September. The ISM Index totaled 49.9% in August. Economists surveyed by Bloomberg News had expected the index to drop to 41.5 in October. An ISM reading below 50 indicates a contraction; above 50, an expansion.

Economist Peter Dawson said one doesn't have to be a Harvard MBA to discern U.S. factory trends. "The U.S. manufacturing sector is in a deep recession, with nary a growth catalyst in sight," Dawson said. "Further, the stats are likely to worsen in the immediate quarter ahead, given the likely slowdown in international trade. Thank goodness the Boeing strike was settled, or who knows what these numbers would fall to in early 2009."

Further, Dawson said he favored a U.S. Government rescue of the U.S. automakers, "if for no other reason than preventing the manufacturing sector from cratering further." He added that he expects the new Congress and president to approve a auto sector rescue package.

In a surprise, the U.S. manufacturing sector increased production and expanded in June.

The Institute for Supply Management Manufacturing Index rose to 50.2 in June from 49.6 in May, the Institute announced Tuesday. It was the first increase for the index since January. Readings above 50 indicate economic growth; readings below 50, economic contraction.

Economists surveyed by Bloomberg News had expected the index to drop to 48.7 in June 2008.

Economist David H. Wang Tuesday cautioned against taking a too positive interpretation of the June ISM manufacturing data. "We have to keep in mind that this is just one month and the trend had indicated contraction for five months," Wang said. "Also, we are barely above 50, and the index could easily drop below 50 in the next month, which would be consistent with a continuing contraction, so evaluate the June results in that context."

Register a mild, positive data point for the U.S. economy. In May, the U.S. service sector slowed at a pace less than economists had expected.

The Institute for Supply Management announced Wednesday that its non-manufacturing or service index nudged lower to 51.7% in May from 52.0 in April. Readings above 50 indicate an expansion; below 50, a contraction. Hence, because the index remained above 50 in May, the expansion in the service sector continued for a second straight month, the ISM said. Economists surveyed by Bloomberg News had expected the services index to decline to 51.0 in May.

Thirteen of the ISM's service industries grew in May. The ISM added that members' comments in May reflected concern about business conditions, including rising costs, and the overall sluggish U.S. economy.

Economic Analysis: Many economists tend to place less emphasis on the ISM services index, compared to the capital-intensive manufacturing index. Still, the services index does provide helpful clues regarding the economy and the May statistic further confirmed that the U.S. at mid-year is experiencing very sluggish, region-specific growth, but not a contraction -- at least not yet. Credit conditions are tight, but credit availability has not been totally shut down. Corporations large and small are tightening their belts, but some business-to-business spending is occurring. Lay-offs are occurring, but so far, there is no tidal wave of layoffs.

The U.S. manufacturing sector continued to pare production in May 2008, but at a milder-than-expected pace. The Institute for Supply Management Manufacturing Index for May 2008 increased to 49.6 in May 2008 from 48.6 in April 2008, the institute announced Monday.

It was the fourth consecutive monthly decline for the index. Readings above 50 indicate economic growth; readings below 50, economic contraction.

Economists surveyed by Bloomberg News had expected the index to drop to 48.5 in May 2008.

The index registered growth in seven of 18 categories in May 2008:

Seven industries reported growth in May 2008, the ISM said: computer & electronic products; miscellaneous manufacturing; primary metals; paper products; chemical products; food, beverage and tobacco products; and fabricated metal products. Eleven industries reported a contraction in May 2008: apparel, leather and allied products; electrical equipment, appliances and components; wood products; machinery; plastics and rubber products; transportation equipment; non-metallic mineral products; printing and related support activities; and furniture and related products.

Economic Analysis: A surprisingly tame May 2008 ISM manufacturing data point. Demand for products overseas is driving an export revival and it's propping-up U.S. commercial activity even as domestic demand remains sluggish-to-poor, depending on the sector. Still, the overall manufacturing index remains below 50, indicating an obvious deceleration in the GDP growth rate and a likely economic contraction. Hence, while investors / traders can cheer the export numbers, they should keep in mind the large housing / energy price headwinds likely to damper U.S. economic growth for several quarters, or longer, if energy prices remain at record-high levels.

The services industry in the United States unexpectedly expanded in April 2008, the Institute for Supply Management announced Monday.

The ISM's non-manufacturing index rose to 52 in April 2008 from 49.6 in March 2008. The services index had declined in the three months before April 2008.

Economists surveyed by Bloomberg News had expected the April 2008 survey to fall to 49.3. Readings below 50 indicate a contraction.

Conflicting economic data

Economist David H. Wang said Monday the services sector report adds another "counter conventional wisdom" data point to the current U.S. economic landscape. "When you add the services number with last week's rise in April [2008] factory orders, you have a complex economic picture right now," Wang said. "On the one hand, some economists will point to the housing slump, which is a legitimate head wind. On the other hand, others will point to services and factory indicators that say the economy is not as weak as many had thought it would be. It's a conflicted, muddled economic picture right now."

The Institute for Supply Management Manufacturing Index for February 2008 fell to 48.3 from 50.7 in January 2008, the institute announced Monday.

Readings above 50 indicate economic growth; readings below 50, economic contraction. Economists surveyed by Bloomberg News had expected the index to drop to 48.1 in February 2008.

The index registered declines in 11 of 18 categories and hit a 5-year low. New orders decreased to 49.1 from 49.5; production dropped to 50.7 from 55.2; prices paid declined to 75.5 from 76; employment fell to 46 from 47.1, and supplier deliveries dropped to 50.1 from 52.8.

"The manufacturing sector failed to grow during the month as the PMI fell below 50%, which indicates weaker performance in February when compared to January," Norbert J. Ore, ISM chairman said, in a statement. "Manufacturers' order backlogs continue to erode as the New Orders Index remained below 50% for the third consecutive month." Ore added that with manufacturing inventories at reasonable levels, the primary concern is rising prices and falling volume.

Economic Analysis: A decidedly bearish data point for the U.S economy. Now below 50, the reading indicates a clear contraction, and a significant deceleration in the GDP growth rate. The U.S. economy is clearly feeling the impact of the housing / residential construction market's slowdown, as it ripples through the economy, lowering demand for furniture, appliances, building materials, and home supplies.