A Framework That Provides Clarity

During periods of “low visibility,” confusion reigns: for every indication of one trend, there seems to be a countertrend. The key is to glean from the collective wisdom of reliable leading indicators a clear signal that the economy is headed for a turn.

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Aug 28 2013

Prospects for U.S. Service Sector Growth

Early this month the release of the Institute of Supply Management’s (ISM) Non-Manufacturing Index persuaded the consensus of forecasters that the most important U.S. economic sector was on the road to recovery. The overall index jumped to its highest reading since February, mostly due to a surge in its new orders component.

Given the optimism, it is important to review the latest cyclical moves of ECRI’s U.S. Leading Services Index (USLSI), because it is a more comprehensive measure of the cyclical drivers of the service sector, and its growth rate generally leads turning points in the ISM Non-Manufacturing Index. As a result, the USLSI growth rate already provides clearer information about the likelihood of a recovery in U.S. service sector growth.