By Carlos Guillen
Stocks are trading higher this morning as it is apparent that the fall in European markets yesterday has not gotten out of control which is helping to bring a sigh of relief to the U.S. markets. Additionally a good showing from China's services industry, coupled with continuing growth in American services, are all coming together to boost equity markets today.
Just as data from the Institute for Supply Management (ISM) showed last week that U.S. economic activity in the manufacturing sector (PMI) expanded in January for a second consecutive month, landing better than expected, ISM data posted today showed that economic activity in the non-manufacturing sector (NYSE:NMI) continued expanding during the same time period. While the Non-manufacturing ISM Index in January clocked in at 55.2 percent, decreasing from the 55.7 percent reported for December and landing below the 55.6 percent consensus estimate, it did represent the 37th month of consecutive growth.
Also encouraging was that employment activity in the non-manufacturing sector increased by 2.2 percentage points to 57.5 percent, indicating growth in employment for the sixth consecutive month, at a faster rate. Moreover, of the ten available components of NMI, eight non-manufacturing industries reported growth in January. And while respondents' comments were mixed about the economy and business conditions, the majority of respondents were optimistic about the overall direction.
Over on the other side of the world, China's services industries expanded at the fastest pace in four months in January, supporting a recovery in the world's second-biggest economy. The services Purchasing Managers' Index released by HSBC Holdings Plc and Markit Economics today rose to 54.0 from 51.7 in December, above the threshold that separates growth from contraction.
At the moment, it is apparent that investors have been encouraged with the overall economic data bits they have seen and are driving stocks higher, with the Dow Jones industrial Average up over 100 points, or 0.75 percent.