Boosted by services, the private sector economy moved into the realm of expansion for the first time in 15 months in November. The composite PMI rose to 50.4, improving from the preliminary reading of 49.9 and 47.7 in October.

The services component rose to 51.4 from 48.0 in October, underscoring the improved services economy. Still, manufacturing remains a drag as seen by the contraction earlier this week to 47.8 in November from 48.8 in October.

New business was the impetus behind the improvement in the services component, which was the first monthly increase since August of last year, coming from new and existing customers. While the increase in business activity was muted, businesses engaged in services are optimistic about the coming twelve months and plan to increase hiring.

In a highly competitive environment, services providers indicated they are unable to increase prices, suggesting they are absorbing costs. While input costs increased, prices charged remained little changed.

Despite the welcome expansion, there are still fissures in the private sector economy, particularly in the manufacturing sector. With businesses under pressure to not increase prices, this will squeeze margins and could impact further investment. Whether the private sector can build on today's positive developments remains to be seen.

The Composite Purchasing Managers' Index (PMI) provides an estimate of private sector output for the preceding month by combining information obtained from surveys of around 750 manufacturing and service sector companies. Results are synthesised into a single index which can range between zero and 100. A reading above (below) 50 signals rising (falling) output versus the previous month and the closer to 100 (zero) the faster is output growing (contracting). The report also contains the final estimate of the services PMI. The data are provided by S&P Global.

Investors need to keep their fingers on the pulse of the economy because it dictates how various types of investments will perform. By tracking economic data such as the purchasing managers' manufacturing indexes, investors will know what the economic backdrop is for the various markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly and causing potential inflationary pressures.