January 5, 2011

ADP and ISM Reports (Finally) Point to Decent Expansion; Employment Readings Diverge

Filed under: Economy,Taxes & Government — Tom @ 10:35 am

The Institute for Supply Management’s two primary reports came in strong this week:

  • Monday’s Manufacturing Index was 57.0%, up from 56.6% in December, the 17th month in a row with an expansionary number above 50%.
  • Today’s Non Manufacturing Index leaped to 57.1% from 55.0% in December.

The weighted average of the two indices is the highest it has been in a very long time.

ADP’s employment report shows 297,000 private-sector jobs added in December. That’s probably the highest number in about 3-1/2 years, if not longer, and was about triple expectations.

Oddly, the Employment components of the two ISM indices are heading in the opposite direction from ADP’s clearly cheerful and hopefully correct finding. While Manufacturing’s Employment reading of 55.7% remained strong, it was lower than November’s 57.5%. The Employment component in the far more important Non Manufacturing Index (80%-plus of the economy) dropped to a barely expanding 50.5% from 52.7%. That’s clearly not in sync with ADP.

If the ADP number comes close to holding up in Friday’s Employment Situation Report, all I can say is: What a difference the prospect of a Republican House placing some limits on the Obama administration makes. Don’t let us down, guys and gals.

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