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The Institute for Supply Management's (ISM) services index rose in September to 50.9, beating the consensus forecast of 50. A figure above 50 implies the sector is growing. A figure under 50 implies contraction. The index bottomed late in 2008, below 40, and has made a steady recovery since. The September data came in at a 16-month high progressing from August’s 48.4.

The better than expected service sector news contradicts recent payrolls data which has continued to disappoint. US unemployment now stands at 9.8%.

The US news mirrored equivalent Euro-zone data where the service sector index also improved, beating predictions, whilst unemployment continued to worsen.

Other US economic news included mortgage application data which rose in the week ending 2nd October, with consumers taking advantage of lower property prices and competitive loan rates. The rates on 30-year fixed rate mortgages, the most popular loan, were under 5% for the third consecutive week. Refinancing mortgage applications were at a 5-month high whilst new home applications were at the highest level since the turn of the year.

Refinance loans represented 66% of all home mortgage applications in the week.

Most commentators suggest the housing market has stabilized but have offered caution going forward, citing rising unemployment and the imminent end of the $8,000 tax-credit scheme for first time buyers.

Source: U.S. Economic News Offers Glimmers of Hope for Housing, Service Sectors