U.S. Service Industries Expand for First Time in a Year as Recovery Widens

Source: Bloomberg

By Shobhana Chandra

Oct. 5 (Bloomberg) -- U.S. service industries expanded in September for the first time in a year as the emerging recovery spread from housing and factories to the broader economy.

The Institute for Supply Management’s index of non- manufacturing businesses, which make up almost 90 percent of the economy, rose to 50.9, higher than forecast, from 48.4 in August, according to the Tempe, Arizona-based group. Fifty is the dividing line between expansion and contraction.

Federal Reserve efforts to unlock credit and government measures such as “cash-for-clunkers” and a tax credit for first-time homebuyers are reviving demand and likely helped the economy grow last quarter. Nonetheless, last week’s report showing job cuts accelerated in September is a reminder that gains in purchases may not be sustained as incentives expire.

“Conditions are better than they were in earlier months,” Michael Moran, chief economist at Daiwa Securities America Inc. in New York, said before the report. While the economy is improving, “the turn is occurring slowly and the recovery will probably lack vigor.”

The index was projected to increase to 50, according to the median forecast in a Bloomberg News survey of 70 economists. Estimates ranged from 45 to 52.1. Before today’s report, the gauge had shown contraction in every month since October 2008, a month after Lehman Brothers Holdings Inc. filed for bankruptcy.

Read more: http://www.bloomberg.com/apps/news?pid=20601087&sid=afnd7OldGczg

First, it's a crappy article because it never explains just what the ISM index is and what it measured in the non-manufacturing area.

Then it talks about hiring going down in August and September, but credits 'Cash for Clunkers' for reviving the economy -- even though that is a manufacturing area and car sales tanked last month.

We're seeing more and more propaganda on the economy -- in the face of more and more actual evidence that things are getting worse.

Forget the stock market and GDP for indicators of any improvements -- look at unemployment and state and local tax revenue for a real indication of the state of the economy -- and right now it is still very bad.