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Instant view: Service sector growth rises in December

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CIOL Bureau
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NEW YORK, USA: The non-manufacturing sector grew in December at its fastest pace in more than four years, according to an industry report released on Wednesday.

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KEY POINTS:  The Institute for Supply Management said its index of national services activity rose to 57.1 in December from 55 in November, The median forecast of 51 economists surveyed by Reuters was for a reading of 55.6.

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COMMENTS:

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JOHN CANALLY, INVESTMENT STRATEGIST, LPL FINANCIAL, BOSTON

"I think it confirms that at the end of 2010 the economy had some pretty good momentum. The only thing I would say in the report that I would be a little concerned about is the deceleration in the employment part of it, that fell back to 54. But new orders were strong, production were strong, so 2010 ended on a strong note. Since the service sector is 80 percent of the economy that's good to see. There's definitely some momentum that should carry on into the early part of this year as well."

SEAN INCREMONA, ECONOMIST, 4CAST LTD, NEW YORK:

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"It looks good, yet another number that beats consensus and keeps the positive sentiment on the economy alive with some momentum going into the new year. The breakdown of this number looks pretty good -- business activity and new orders led the upside. There is a strange decline in the employment index, it is still in expansion but no where near what ADP showed us this morning.

"We are definitely cautiously optimistic for 2011, we see the recovery continuing through the year."

STEVE GOLDMAN, MARKET STRATEGIST, WEEDEN & CO., GREENWICH,

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CONNECTICUT:

"Again, data is better than expected. More or less we've been seeing that with a host of data, including this morning's ADP report. A lot of this has been anticipated. You're seeing a lot of people bullish on the (stock) market, and we would have had a greater response if people were less bullish on the market. A lot of short-term investors have already committed."

CHARLIE SMITH, CHIEF INVESTMENT OFFICER AT FORT PITT CAPITAL

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GROUP, PITTSBURGH:

"The key from all the releases today is that small and mid-sized businesses have picked up hiring. The ADP report showed that small businesses in the services realm picked up hiring considerably, so I don't think the ISM number is very surprising. There's not a lot of news in this.

"ADP's reliability has been questioned, but it is certainly going in the right direction ahead of Friday's report."