ISM non-manufacturing index reports a "giant surge of strength" for July and comes in at the highest reading in 10 years.

ISM's non-manufacturing sample reports a giant surge of strength, to 60.3 for the July index and the highest reading in 10 years. The result far surpasses expectations where the high-end Econoday forecast was 57.5.

New orders, at 63.8, and backlog orders, at 54.0, both show substantial acceleration from June as do new export orders. Strong orders are boosting employment which, echoing this morning's earlier release of the Services PMI report, is robust, at 59.6 for one of the strongest readings on the books.

Breadth is very strong with 15 of 18 industries reporting composite growth in the month including gains for retail trade, transportation & warehousing, and construction. Mining is one of two reporting contraction.

The rise in export orders underscores the strength of the nation's trade surplus in services which, despite strength in the dollar, is getting a boost from foreign demand for technical and management services. The service sector appears to be rolling along fine and will likely continue to offset weakness in manufacturing. And for Friday's jobs report outlook, the employment index in this report will help offset this morning's very weak ADP estimate.