Overall business confidence in the sample did rise in the month but remains close to a 3-1/2 year low. Price data remain subdued but, in what would be a positive for the Fed's efforts to lift inflation, the report does note signs of rising wage pressure.
This report hints at another quarter of subdued growth for the economy. The ISM non-manufacturing report, which samples not only the service sector but also mining and construction, has been showing greater strength.
Recent History Of This Indicator:
The services PMI had been one of the most solid and consistent indicators on the calendar but has begun to slow. The Econoday consensus for the final January reading is 53.7, unchanged from the flash and down 6 tenths from December. Growth is as slow as it's been in a year for this indicator, reflecting cutbacks in the energy sector and uncertainty over the economic outlook.
The services PMI had been one of the most solid and consistent indicators on the calendar but has begun to slow. The Econoday consensus for the final January reading is 53.7, unchanged from the flash and down 6 tenths from December. Growth is as slow as it's been in a year for this indicator, reflecting cutbacks in the energy sector and uncertainty over the economic outlook.
...meanwhile...
Monthly
growth is slowing noticeably in ISM's non-manufacturing sample. The
composite index for January fell a sharp 2.3 points to 53.5 from
December's revised 55.8 which is 2 points below the Econoday consensus.
Slowing is most apparent in output (as measured by the business activity
component) with employment growth also slowing sharply, to 52.1 for a
4.2 point dip. However new orders, at 56.5, remain solidly above
breakeven 50 though here to there is slowing, from December's 58.9.
Supplier deliveries, the fourth component of the composite, slowed in
the month in a sign of congestion in the supply chain in what is an
offsetting positive for the month.
Other readings include a solid 52.0 for backlog orders which are extending a long string of monthly expansion that contrasts sharply with a long string of contraction in the rival PMI services report. Inventories in ISM's sample continue to rise but at only a marginal pace. Weakness is signaled by both contraction in import orders, which points to business caution among U.S. businesses, and also for export orders, the result of weak foreign markets and the negative effects of the strong dollar. Input prices, which have been subdued, fell in the month.
A negative in the report is narrow breadth among industries with 10 reporting composite growth in the month vs 8 reporting contraction, with the latter led by continued weakness for mining. Strength is led by both finance and real estate and includes construction.
Through much of last year, this report was among the most resilient, consistently pointing to steady strength that for the most part proved correct. Today's declines, along with the dip in the PMI services report released earlier this morning, unfortunately hint at soft growth for the first quarter while this report's employment index, hitting its lowest point since January last year, points to modest disappointment for Friday's employment report.
Other readings include a solid 52.0 for backlog orders which are extending a long string of monthly expansion that contrasts sharply with a long string of contraction in the rival PMI services report. Inventories in ISM's sample continue to rise but at only a marginal pace. Weakness is signaled by both contraction in import orders, which points to business caution among U.S. businesses, and also for export orders, the result of weak foreign markets and the negative effects of the strong dollar. Input prices, which have been subdued, fell in the month.
A negative in the report is narrow breadth among industries with 10 reporting composite growth in the month vs 8 reporting contraction, with the latter led by continued weakness for mining. Strength is led by both finance and real estate and includes construction.
Through much of last year, this report was among the most resilient, consistently pointing to steady strength that for the most part proved correct. Today's declines, along with the dip in the PMI services report released earlier this morning, unfortunately hint at soft growth for the first quarter while this report's employment index, hitting its lowest point since January last year, points to modest disappointment for Friday's employment report.
Recent History Of This Indicator:
The ISM non-manufacturing index had been running very hot, near 60 before slowing to what are still very solid readings in the mid-50s. The Econoday consensus is calling for stable strength in January, at 55.5. New orders have been very strong as has employment in this report. And unlike ISM's manufacturing sample which has been cutting back inventories, ISM's non-manufacturing sample has been building inventories and pointing to confidence in the business outlook.
The ISM non-manufacturing index had been running very hot, near 60 before slowing to what are still very solid readings in the mid-50s. The Econoday consensus is calling for stable strength in January, at 55.5. New orders have been very strong as has employment in this report. And unlike ISM's manufacturing sample which has been cutting back inventories, ISM's non-manufacturing sample has been building inventories and pointing to confidence in the business outlook.
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