ISM Non-Manufacturing Index Slows

A little bit of cooling can be a good thing especially for a sample that has been reporting unusually strong and perhaps unsustainable strength. ISM's non-manufacturing index slowed by 1.5 points in December to a 55.9 level that misses Econoday's low estimate. But the level is still very favorable with details led by a 1.0 point rise in employment to 56.3. New orders did slow a sharp 4.4 points but also remain well in plus-50 positive ground at 54.2 with new export orders strong at 56.5 and a reminder that service exports are a major positive for the U.S. economy. But backlog orders, at 50.0 exactly, were flat while business activity (which is a production reading) slowed by 4.1 points to 57.3. The breakdown shows a very solid 14 of 17 industries reporting monthly growth led by retail which is hint of strength for December's retail sales report which comes out next week. Mining and construction, which are non-service industries that are tracked in this report, both posted monthly gains. The headline aside, this report is consistent with a strong year-end finish for the economy.

Recent History Of This Indicator: The ISM non-manufacturing index cooled noticeably in November, falling 1.6 points to 57.4 and failing to meet low end expectations. Most readings eased by several points including new orders, backlog orders and employment. Still November's readings were very favorable as they have been all year. 57.6 is the Econoday consensus for December.