Service Economy in U.S. Expands More Than Forecast to 64.7 in ISM Survey

U.S. October ISM Service Economy Index Rises to 64.7 (Update1) Nov. 5 (Bloomberg) -- A gauge of U.S. service industries, the largest part of the economy, rose in October and signaled expansion for a seventh straight month, an industry report showed.

The employment index climbed to 52.9 from 49.1. Last month's employment reading was the highest since 54.2 in November 2000.

I must have missed this on Headline News. :-)

Payrolls may have expanded by 125,000 last month, Deutsche Bank estimates, more than twice as much as the 60,000 median projection in a Bloomberg News survey of 67 economists.

Wow, last I heard the estimate was for a 50K job gain. Let's hope the truth is closer to this estimate.

There was a time when the vast majority of the population earned their income on the farm. Most of those jobs are gone forever, as marginal farmers were squezed out throught automation and large-scale farming. So they went into manufacturing jobs. Now the manufacturing jobs are going away for ever, as manufacturers are moving off-shore or automating.

It makes no more sense to try to hang on to those manufacturing jobs through government intervention than it would have to try to hang on to all that former farm employment.

The real problem is not that manufacturing employment is permanently contracting, but rather that what we've got to replace it isn't turning out to be as good as what had been hoped for. The promise was that instead of being laborers making stuff, many of our people would become technicians programming, maintaining, and repairing the machines that were making stuff. It hasn't turned out that way. Between the internet and globalization, many of the "knowledge-worker" jobs have migrated overseas much sooner than anticipated. What we are left with are low wage service jobs: food service, retail sales, tourism, etc.

A huge portion of the blame for this falls upon our school system. The truth of the matter is that the average high school graduate in countries like India or China probably is much better educated than the typical product of our US schools. Why, then, should anyone hire our graduates when they can get the overseas graduates for a fraction of the cost? Several decades of foolishness are now taking their toll, and the bills are finally coming due. Because we have raised up a generation of uneducated, ignorant brats, it is inevitable that the well-paying jobs are no longer here, but rather at places where a better-educated talent pool is available.

The one thing we do have going for us is our military. We're the best in the world. There should be a good business in providing global security services. But that would require RECEIVING billions in funding from our clients, instead of it going the other direction. Understandably, we're not the kind of people that are comfortable with exacting tribute, or making our young people serve as mercenaries. But if we don't face up to reality and start getting serious about educating our children, that may be about the only "service economy" employment option left open to them.

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