Home Logon FTA Investment Managers Blog Subscribe About Us Contact Us

Search by Ticker, Keyword or CUSIP       
 
 

Blog Home
   Brian Wesbury
Chief Economist
 
Bio
X •  LinkedIn
   Bob Stein
Deputy Chief Economist
Bio
X •  LinkedIn
 
  The ISM Non-Manufacturing Index Declined to 57.6 in December
Posted Under: Data Watch • ISM Non-Manufacturing
Supporting Image for Blog Post

 

Implications:  The pace of growth in the service sector slowed in December, but despite the year-end dip, 2018 averaged the highest reading for the index since the series began in the late 1990s.  And while the pouting pundits may put up a huff over the monthly decline (any slowdown in economic data has brought out the doomsayers), the December reading of 57.6 was higher than the annual reading for any year since 2005, except for 2018 itself.  In other words, hardly reason for concern.  A look at the details of today's report shows that growth was broad-based, with sixteen of eighteen industries reporting growth in December while just one, mining, reported a decline (one industry reported no change).  In addition to the breadth of growth, the two most forward-looking indices – new orders and business activity – remain comfortably in growth territory, even with the 5.3-point decline in the business activity index.  The employment index, in a somewhat paradoxical move given last Friday's booming jobs report - declined to 56.3 from 58.4 in November.  Survey respondents continue to note that the tightening labor market has made hiring (and retaining) employees more difficult, and this in turn has been pushing wages higher.  Finally, the supplier deliveries index once again declined in December, signaling that delays related to labor shortages, component shortages, and freight issues (due to a lack of truck drivers), are easing somewhat.  These delays, paired with the strength in new orders, are putting upward pressure on prices – which continued to rise in December though at a slower pace than in November.  While we don't expect prices will soar any time soon, this suggests inflation will continue to run near-or-above the Fed's 2% target, keeping the Fed on track for continued rate hikes in 2019 if long term interest rates move up as we expect.  As a whole, 2018 was a strong year for both the services and manufacturing sectors, and the tailwinds that sped growth look set to continue in the new year.  

Click here for PDF version

Posted on Monday, January 7, 2019 @ 12:33 PM • Post Link Print this post Printer Friendly

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
Search Posts
 PREVIOUS POSTS
No Sign of Recession
Nonfarm Payrolls Rose 312,000 in December
The ISM Manufacturing Index Fell to 54.1 in December
Dow 28750, S&P 500 3100
M2 and C&I Loan Growth
M2 and C&I Loan Growth
Greedy Innkeeper or Generous Capitalist?
Personal Income Rose 0.2% in November
Real GDP Growth in Q3 was Revised to a 3.4% Annual Rate
New Orders for Durable Goods Rose 0.8% in November
Archive
Skip Navigation Links.
Expand 20242024
Expand 20232023
Expand 20222022
Expand 20212021
Expand 20202020
Expand 20192019
Expand 20182018
Expand 20172017
Expand 20162016
Expand 20152015
Expand 20142014
Expand 20132013
Expand 20122012
Expand 20112011
Expand 20102010

Search by Topic
Skip Navigation Links.

 
The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
Follow First Trust:  
First Trust Portfolios L.P.  Member SIPC and FINRA. (Form CRS)   •  First Trust Advisors L.P. (Form CRS)
Home |  Important Legal Information |  Privacy Policy |  California Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2024 All rights reserved.