Non-manufacturing ISM report shows job growth expanding

Service industries in the U.S. expanded for a fifth month and factory orders rose, pointing to a broadening economic recovery that’s generating more jobs. For the first time, the non-manufacturing ISM index's employment component shows expansion at 50.4 from last month's 49.5. Backlog of orders increased 6.5% from 49.5 to 56, also the first exapnsion since the recession started.

Of course, the manufacturing employment has been leading the job growth, expanding for a sixth month in May. But the service sector makes up almost 90% of the U.S. economy. There will be no real job growth if the service sector doesn't employ more people. It's a good sign that it is finally catching up.

Tomorrow's employment report should provide more color to the picture. Consensus is for 540,000 payroll jobs added in May, but this will include around 400,000 temporary Census jobs. More private jobs is key.