The October Non-manufacturing Sector Business Activity Index from the Institute for Supply Management recovered more than half of its September decline with a 6.7 point increase to 60.0. Consensus expectations had been for a lesser recovery to 57.0.

Since the series' inception in 1997 there has been a 50% correlation between the Business Activity Index and the q/q change in real GDP for services plus construction.

The orders index gained back just a piece of its September decline with a 1.6 point rise. Conversely, the employment index fell for the third month in the last four to the lowest level since January. Since the series' inception in 1997 there has been a 60% correlation between the level of the ISM non-manufacturing employment index and the m/m change in payroll employment in the service producing plus the construction industries.

Pricing power reversed just some of the 14.3 point September surge to a record high with a 3.4 point decline. Since inception eight years ago, there has been a 70% correlation between the price index and the y/y change in the GDP Services chain price index.

ISM surveys more than 370 purchasing managers in more than 62 industries including construction, law firms, hospitals, government and retailers. The non-manufacturing survey dates only to July 1997, therefore its seasonal adjustment should be viewed tentatively.

Business Activity Index for the non-manufacturing sector reflects a question separate from the subgroups mentioned above. In contrast, the NAPM manufacturing sector composite index is a weighted average five components.

Today's testimony by Fed Chairman Alan Greenspan on the Economic Outlook before the Joint Economic committee can be found here.