Services accelerate

In contrast to manufacturing, the services sector in the US remained resilient in November. Reuters reports:

Growth in the U.S. services sector accelerated unexpectedly in November...

The Institute for Supply Management's services index rose to 58.9 in November from 57.1 in October. The median forecast of Wall Street economists was for a decline to 56.0...

The ISM report helped offset the impact of a 4.7 percent slump in new orders at U.S. factories in October, the biggest drop in more than six years.

Another report yesterday showed that third-quarter productivity and labor costs grew more slowly than forecast.

... U.S. worker productivity rose 0.2 percent in the third quarter... Nonfarm business productivity was forecast by analysts polled by Reuters to rise at a 0.4 percent annual rate. While it fell short of that mark, it was revised up from the flat reading initially reported by the Labor Department.

Productivity grew just 1.4 percent from the same quarter last year, the weakest year-on-year performance since the second quarter of 1997, when it expanded 1.3 percent.

Compensation per hour increased 2.6 percent, versus a 3.7 percent rise initially reported in the third quarter.

Europe also saw acceleration in the services sector. Bloomberg reports:

Growth in European services industries, the biggest part of the economy, unexpectedly accelerated in November, prompting speculation the European Central Bank will keep raising interest rates next year.

Royal Bank of Scotland Group Plc said today its services index, which accounts for about a third of the economy and covers industries such as telecommunications and banking, rose to 57.6, a four-month high, from 56.5 in October. Economists expected an unchanged reading, the median of 32 estimates in a Bloomberg News survey showed. A level above 50 indicates growth.

And eurozone retail sales were up in October. From AFX/Forbes:

Euro zone retail sales rebounded slightly in October after a sharp drop the month before, with a strong increase in French sales contributing to the recovery.

Retail sales rose 0.3 pct in October from September, EU statistics office Eurostat said.

It was a somewhat similar story in the UK. From Reuters:

The Chartered Institute of Purchasing and Supply/Royal Bank of Scotland's services business index jumped to 59.8 last month, its highest since January 2004 and one of the strongest readings in the survey's 10-year history.

That was up from 59.3 in October and well above analysts' forecasts of a modest pullback to 58.8.

On the other hand, November also saw UK retail sales grew at their slowest annual rate in eight months while annual growth in take-home pay slowed sharply.

Just as well that having fun in the UK is becoming cheaper.